Marginal utility

In mainstream economics, marginal utility describes the change in utility (pleasure or satisfaction resulting from the consumption) of one unit of a good or service.^[1] Marginal utility can be positive, negative, or zero. Negative marginal utility implies that every additional unit consumed of a commodity causes more harm than good, leading to a decrease in overall utility. In contrast, positive marginal utility indicates that every additional unit consumed increases overall utility.^[2]

In the context of cardinal utility, liberal economists postulate a law of diminishing marginal utility. This law states that the first unit of consumption of a good or service yields more satisfaction or utility than the subsequent units, and there is a continuing reduction in satisfaction or utility for greater amounts. As consumption increases, the additional satisfaction or utility gained from each additional unit consumed falls, a concept known as diminishing marginal utility. This idea is used by economics to determine the optimal quantity of a good or service that a consumer is willing to purchase.^[3]