marginal utility | economics - Encyclopedia Britannica
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marginal utility, in economics, the additional satisfaction or benefit (utility) that a consumer derives from buying an additional unit of a commodity or ... marginalutility TableofContents marginalutility Introduction FastFacts RelatedContent Media Images More MoreArticlesOnThisTopic Contributors ArticleHistory Home Politics,Law&Government Economics&EconomicSystems marginalutility economics Actions Cite verifiedCite Whileeveryefforthasbeenmadetofollowcitationstylerules,theremaybesomediscrepancies. Pleaserefertotheappropriatestylemanualorothersourcesifyouhaveanyquestions. SelectCitationStyle MLA APA ChicagoManualofStyle CopyCitation Share Share Sharetosocialmedia Facebook Twitter URL https://www.britannica.com/topic/marginal-utility GiveFeedback ExternalWebsites Feedback Corrections?Updates?Omissions?Letusknowifyouhavesuggestionstoimprovethisarticle(requireslogin). FeedbackType Selectatype(Required) FactualCorrection Spelling/GrammarCorrection LinkCorrection AdditionalInformation Other YourFeedback SubmitFeedback Thankyouforyourfeedback Oureditorswillreviewwhatyou’vesubmittedanddeterminewhethertorevisethearticle. JoinBritannica'sPublishingPartnerProgramandourcommunityofexpertstogainaglobalaudienceforyourwork! ExternalWebsites KhanAcademy-MarginalUtilityandBudgetLines Academia-FiveKeyCriticismsAbouttheTheoryofMarginalUtility Print Cite verifiedCite Whileeveryefforthasbeenmadetofollowcitationstylerules,theremaybesomediscrepancies. Pleaserefertotheappropriatestylemanualorothersourcesifyouhaveanyquestions. SelectCitationStyle MLA APA ChicagoManualofStyle CopyCitation Share Share Sharetosocialmedia Facebook Twitter URL https://www.britannica.com/topic/marginal-utility Feedback ExternalWebsites Feedback Corrections?Updates?Omissions?Letusknowifyouhavesuggestionstoimprovethisarticle(requireslogin). FeedbackType Selectatype(Required) FactualCorrection Spelling/GrammarCorrection LinkCorrection AdditionalInformation Other YourFeedback SubmitFeedback Thankyouforyourfeedback Oureditorswillreviewwhatyou’vesubmittedanddeterminewhethertorevisethearticle. JoinBritannica'sPublishingPartnerProgramandourcommunityofexpertstogainaglobalaudienceforyourwork! ExternalWebsites KhanAcademy-MarginalUtilityandBudgetLines Academia-FiveKeyCriticismsAbouttheTheoryofMarginalUtility By TheEditorsofEncyclopaediaBritannica • EditHistory TableofContents marginalutility Seeallmedia KeyPeople: CarlMenger WilliamStanleyJevons LéonWalras AlfredMarshall FriedrichvonWieser ...(Showmore) RelatedTopics: utilityandvalue ...(Showmore) Seeallrelatedcontent→ marginalutility,ineconomics,theadditionalsatisfactionorbenefit(utility)thataconsumerderivesfrombuyinganadditionalunitofacommodityorservice.Theconceptimpliesthattheutilityorbenefittoaconsumerofanadditionalunitofaproductisinverselyrelatedtothenumberofunitsofthatproducthealreadyowns.Marginalutilitycanbeillustratedbythefollowingexample.Themarginalutilityofonesliceofbreadofferedtoafamilythathasonlysevensliceswillbegreat,sincethefamilywillbethatmuchlesshungryandthedifferencebetweensevenandeightisproportionallysignificant.Anextrasliceofbreadofferedtoafamilythathas30slices,however,willhavelessmarginalutility,sincethedifferencebetween30and31isproportionallysmallerandthefamily’shungerhasbeenallayedbywhatithadalready.Thus,themarginalutilitytoabuyerofaproductdecreasesashepurchasesmoreandmoreofthatproduct,untilthepointisreachedatwhichhehasnoneedatallofadditionalunits.Themarginalutilityisthenzero. ReadMoreonThisTopic utilityandvalue:Marginalutility Theclassicaleconomistssuggestedthatthisleadstoaparadox.Theyarguedthatutilitycouldnotexplaintherelativepriceoffinejade... Theconceptofmarginalutilitygrewoutofattemptsby19th-centuryeconomiststoanalyzeandexplainthefundamentaleconomicrealityofprice.Theseeconomistsbelievedthatpricewaspartlydeterminedbyacommodity’sutility—thatis,thedegreetowhichitsatisfiesaconsumer’sneedsanddesires.Thisdefinitionofutility,however,ledtoaparadoxwhenappliedtoprevailingpricerelations.Theeconomistsobservedthatthevalueofdiamondswasfargreaterthanthatofbread,eventhoughbread,beingessentialtothecontinuationoflife,hadfargreaterutilitythandiddiamonds,whichweremerelyornaments.Thisproblem,knownastheparadoxofvalue,wassolvedbytheapplicationoftheconceptofmarginalutility.Becausediamondsarescarceandthedemandforthemwasgreat,thepossessionofadditionalunitswasahighpriority.Thismeanttheirmarginalutilitywashigh,andconsumerswerewillingtopayacomparativelyhighpriceforthem.Breadismuchlessvaluableonlybecauseitismuchlessscarce,andthebuyersofbreadpossessenoughtosatisfytheirmostpressingneedforit.Additionalpurchasesofbreadbeyondpeople’sappetiteforitwillbeofdecreasingbenefitorutilityandwilleventuallyloseallutilitybeyondthepointatwhichhungeriscompletelysatisfied. Theconceptofmarginalutilitywasaugmentedinthe20thcenturybythemethodofanalysisknownasindifferenceanalysis(seeindifferencecurve). ThisarticlewasmostrecentlyrevisedandupdatedbyJeannetteL.Nolen.
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