marginal utility

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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 ?
In the discussion above the coding of the four non-price features in the household utility function is linear, which implies that the marginal utilities are the same when moving from low to medium and from medium to high levels.
RPL is based on a random utility model and thus estimates distributions of attribute marginal utilities.
Brav, Constantinides and Geczy find that aggregating marginal utilities, E(mR) = 1 with a risk aversion coefficient between 2 and 5.
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.
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.
There he refers to Mises's naive application of the theory that the marginal utilities of capital and labor are equal, a theory he presents in a simultaneous, static sense in his work on Socialism (when in fact, as Mises and Hans Mayer later recognized, human actions are always sequential, never synchronic, and thus the above equality of weighted marginal utilities is illusory and omits the dynamic process and true economic calculation, which is always sequential and diachronic and takes place from an entrepreneurial perspective in the market).
2] is greater than expected marginal utility, which is the probability average of both marginal utilities.
r] is the global MD caused by a unit of locally generated pollution weighted by the relative marginal utilities of income, ([lambda]).
Via both a mathematical exposition and through examples, Wicksteed demonstrates the principle that the consumer continues to substitute between goods until they reach the point where marginal utilities (for small increments in x), are equalised.