Glossary · Economics

What is Marginal utility?

The additional satisfaction a consumer gains from obtaining one more unit of a good or service. Usually, the more of a good the consumer has, the less useful the next unit is, and at some point it can reach zero: this is called "diminishing marginal utility". The idea is used to explain how price and demand are formed: a person is willing to pay for an additional unit only a price that does not exceed the additional benefit it gives.

Source: Britannica: Marginal utility

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More terms: Economics

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