MARGINAL UTILITY Meaning and
Definition
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Marginal utility is an economic concept that refers to the additional satisfaction or benefit derived from consuming an additional unit of a product or service. It measures the rate at which a consumer's total utility increases or decreases with each additional unit consumed.
The concept of marginal utility is based on the principle of diminishing marginal utility, which states that as a person consumes more of a particular good or service, the satisfaction or benefit derived from each additional unit gradually decreases. For example, the first slice of pizza may bring great pleasure and satisfaction, but the second slice may provide slightly less enjoyment, and so on, until the point where the consumer's satisfaction plateaus or starts to diminish.
Marginal utility is quantified by comparing the change in total utility resulting from the consumption of an additional unit to the change in the quantity of the product consumed. The measurement of marginal utility helps consumers make decisions about how much of a product they should consume based on their preferences and the available resources.
Understanding marginal utility is crucial in the field of economics as it plays a significant role in determining consumer behavior, pricing strategies, and overall market demand. By analyzing the marginal utility of different goods and services, economists can gain insights into consumer preferences, the optimal allocation of resources, and the potential for market equilibrium.
Common Misspellings for MARGINAL UTILITY
- narginal utility
- karginal utility
- jarginal utility
- mzrginal utility
- msrginal utility
- mwrginal utility
- mqrginal utility
- maeginal utility
- madginal utility
- mafginal utility
- matginal utility
- ma5ginal utility
- ma4ginal utility
- marfinal utility
- marvinal utility
- marbinal utility
- marhinal utility
- maryinal utility
- martinal utility
Etymology of MARGINAL UTILITY
The term "marginal utility" was first introduced by the Austrian economist Carl Menger in his book "Principles of Economics" published in 1871. The word "marginal" refers to the additional or incremental, while "utility" refers to the satisfaction or benefit derived from consuming a particular good or service.
Menger used the term to describe how people make decisions regarding the allocation of scarce resources. He argued that individuals make choices based on the incremental satisfaction or benefit they derive from consuming an additional unit of a good or service.
Over the years, the concept of marginal utility became a central concept in economics and was further developed by other economists such as William Stanley Jevons and Alfred Marshall. The term "marginal utility" thus has its roots in the works of these early neoclassical economists.
Similar spelling words for MARGINAL UTILITY
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