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top   »  economics   »  price economics   »  supply and demand   »  demand   »  diminishing marginal utility

What is Diminishing Marginal Utility?

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Diminishing marginal utility is the decreasing value that a consumer assigns to a good as they obtain more of it. It can be used to explain the price difference between water and diamonds. If a person had no water, they would pay more for water than diamonds. However, since water is more plentiful than diamonds, diamonds achieve a higher price.
Overview: Diminishing Marginal Utility
Function
Economics
Definition
The decreasing value that consumers will pay for a good as they obtain more of it.
Related Techniques
Diminishing Returns

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