Diminishing Marginal Utility

Definition

Diminishing marginal utility is the concept that as a person consumes more of a good or service, the additional satisfaction or utility derived from each additional unit decreases.

Related terms

Total Utility: Total utility refers to the overall amount of satisfaction or happiness obtained from consuming a certain quantity of goods or services.

Law of Demand: The law of demand states that as the price of a good or service increases, the quantity demanded decreases, assuming other factors remain constant.

Rational Behavior: Rational behavior refers to individuals making choices based on their preferences and trying to maximize their own well-being given limited resources.