Marginal Utility

Utility is an abstract terms to measure the satisfaction of a consumer gain when a product or service is consumed. Marginal Utility is the additional satisfaction or utility gained when an additional unit of product is consumed. Usually, the total utility of a product will increase when a person consume more units of the product but the Marginal Utility will decrease with each additional unit consumed. The Marginal Utility will diminish until a point where additional unit consumed is of no value.

For example, when you are hungry and are given one piece of cheese cake, the Marginal Utility is very high. The you are given the second piece of the cheese cake, the Marginal Utility for the second piece still high because you love to eat cheese cake. As long as you can eat, you will be given extra pieces of the cake. Up to the sixth piece, the Marginal Utility may be zero, as you do feel any additional satisfaction by eating or not the sixth piece.