Economicscalendar_todayLast updated: Apr 2026
What is Marginal Utility?
/ˌmɑːdʒɪnəl juːˈtɪlɪti/
The additional satisfaction gained from consuming one more unit of a good or service. Marginal utility typically diminishes with each additional unit consumed.
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Everyday Example
The first slice of pizza when you're starving delivers enormous satisfaction. The fourth slice is fine. By the eighth, you're forcing it. Each additional slice has lower marginal utility than the last.
publicReal-World Application
“Airlines use marginal utility pricing — the first-class seat costs 10x economy, but most passengers' marginal utility for the extra comfort doesn't justify the price. The airline captures maximum revenue by serving both segments.”
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Did you know?
The concept of diminishing marginal utility was independently developed by William Jevons, Carl Menger, and Léon Walras in the 1870s — known as the "Marginal Revolution" that transformed economics.
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Key Insight
Diminishing marginal utility explains why more money makes people happier — but less so with each pound. Research shows wellbeing rises sharply with income up to ~£75k, then plateaus. The first £10k matters far more than the last.
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