marginal utility

(redirected from Marginal utilities)
Also found in: Dictionary, Thesaurus.
Related to Marginal utilities: Marginal benefit

Marginal utility

The change in total satisfaction as a result of consuming one additional unit of a specific good or service.

Marginal Utility

In economics, the level of satisfaction a person derives from a good or service. Marginal utility is inherently subjective and thus difficult to measure, but it is important to determining how much supply of a product the market can handle without diminishing demand. Historically, it has been thought that one can quantify the marginal utility of each unit, but some economists disagree with this. See also: Austrian school, Law of Diminishing Marginal Utility.

marginal utility

the increase in satisfaction (UTILITY) a consumer derives from the use or CONSUMPTION of one additional (incremental) unit of a good or service in a particular time period. For example, if a consumer, having eaten three bars of chocolate, then eats a fourth bar, his TOTAL UTILITY will increase, and if he goes on to eat a fifth bar, his total utility will increase further. However, the marginal (incremental) utility derived from consuming the fifth bar of chocolate would tend not to be as great as the marginal utility from consuming the fourth bar, the consumer experiencing DIMINISHING MARGINAL UTILITY as he becomes sated with the product.

Most goods and services are subject to diminishing marginal utility, with consumers being prepared to pay less for successive units of these products since they are yielding lower levels of satisfaction. This explains why the DEMAND CURVE for such products slopes downwards. See CARDINAL UTILITY, ORDINAL UTILITY, CONSUMER UTILITY, CONSUMER EQUILIBRIUM, PARETO OPTIMALITY, PARADOX OF VALUE.

References in periodicals archive ?
But the cost cannot go much further down, because there are other potential renters having other marginal utilities in mind, which will justify profitable renting of the real estate.
Within the random utility framework, the coefficients are interpreted as marginal utilities, and [[beta].sub.ci] is the marginal utility of income.
The first explanation for low [demonstrated] altruism rates is that new goods and services (and corresponding wants) are being developed quickly enough to maintain the marginal utilities of incomes directly used above those possible through caring-based exchanges.
Hence, the statements made above about marginal utilities should not be confused with the total or average monetary service flow produced by an asset.
The approach yields hedonic price equations that can be consistent with declining marginal utilities of nutrients.
The second-order conditions hold when we assume that the cross-partials between the housing characteristics and the composite good are positive, that the marginal utilities of goods h and x are higher in state 1 when the event does not occur than in state 0 when it does, and thus [Mathematical Expression Omitted] that the hedonic price increases at a decreasing rate when the level of characteristic increases, ([II.sub.hh] < 0), that marginal utilities of x and h both increase at decreasing rates, [V.sub.hh] & [V.sub.xx] < 0, that [P.sub.rr] > 0, and that the marginal utility of income is constant.
Technically, utilizing that marginal costs for self-insurance and saving are identical, the comparison simplifies to comparing marginal utilities in the loss and no-loss states.
Finally, likelihood ratio tests could not reject the null hypothesis that [[beta].sup.nolabel.sub.k] = [[beta].sup.calorieonly.sub.k] = [[beta].sup.trafficlight.sub.k] for all k > 1, meaning that the calorie labels only influenced the marginal utility of calories but not the marginal utilities associated with food-type.
119-120) In other words, marginal utility theory states that the relative prices are equal to ratios of the corresponding marginal utilities. This works for the relative prices of say good i and good j as follows:
Moreover, because of the existence of cross-border pollution, the relevant Samuelson rule accounts not only for the marginal willingness to pay for pollution abatement within the emitting country, but also for the marginal willingness to pay for it in the other country, weighted by the relative marginal utilities of income.
Extend the parallel line through to each product's labour supply curve (written in terms of marginal utilities).
In general there can be many such stochastic discount factors--for example, different investors k whose marginal utilities follow different stochastic processes will have different [M.sub.k,t+1] -- but each stochastic discount factor must satisfy equation (2).