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marginal utility
(redirected from Diminishing marginal utility)

   Also found in: Financial, Acronyms, Encyclopedia, Wikipedia 0.01 sec.

marginal utility

In economics, the measure of additional satisfaction (utility) gained by a consumer who receives one additional unit of a product or service. The concept is used to explain why consumers buy more of a product when the price falls.

A consumer's demand for a product is determined by the marginal utility (and the point at which the individual has sufficient quantity). The greater the supply of the item available, the smaller the marginal utility. In total utility, supply is the main price determinant.

The total utility of diamonds is low because their use is mainly decorative, but because of their rarity, the price is high, and the marginal utility is high. On the other hand, the total utility of bread is high because it is essential, but its marginal utility may be very low because it is plentiful, making it much cheaper than diamonds.



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? Mentioned in ? References in periodicals archive
 
He focused his presentation on four key areas: Technology solutions provide diminishing marginal utility, focus on better understanding
Too many choices generate a diminishing marginal utility and actually hinder conversion.
[A]ll the intuitive feelings which lead to the assumption of diminishing marginal utility are irrelevant, and we are free to assume that marginal utility is increasing so that the existence of gambling can be explained with the theory.
 
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