Marginal Utility Concept

The expression “marginal” is a lot used in economy and can be presented as significant increase. This way, marginal utility isn’t more than the utility increase that is verified when is consumed one more unit of the good.

While isn’t achieved satiation, marginal utility is always positive, being, there will always be some utility increase when is consumed more than one unit of the good. However, due to the Decreasing Marginal Utilities Law, this utility increase is smaller and smaller. For example, when is consumed the first apple, is taken a certain utility; when consuming the second apple the total utility increases but the increment is inferior to the one verified with the consumption of the first apple; when is consumed the third apple, supposing that hasn’t been reached satiation, utility increases again but the increment reduces again, and so on.   

 

Presentation of the numeric example

Presentation of a numeric example where is possible to verify that the utility (U) increases as it is consumed more than one unit of the good (Qty) but increases with increments lower and lower, this is, marginal utility is decrescent.

 

 

Translated from Portuguese by Susana Saraiva, Portuguese-English and English-Portuguese translation specialist. Contact: spams@sapo.pt.