Commodities
If you are walking in the desert and you haven't had water for many hours, you might be willing to pay a very high price for a bottle of water.Land
If your house is on 0.25 acres of land, adding 1 acre may completely change your life. If your house is on 500 acres of land, you could add an acre without noticing.Consumer Products
Many consumers are happy with a single smart phone and wouldn't know what to do with a second.Business Products
A small business buys a second office printer because their first printer is often busy. They consider buying a third but decide it wouldn't get used much.Assets
A single tractor is priceless to a small farm, a second tractor is of no use.Money
If you have $100 in the bank, an extra $10,000 might make a big difference to you. If you have, $100,000,000 in the bank, an extra $10,000 might not be meaningful to your life.Public Goods
Connecting two cities with a road has significant value. Expanding the road to have four lanes may have less value.Services
If you don't have access to a streaming music service, subscribing to one may have significant value. Subscribing to a second music service may have far less value. Ideally, a consumer would want one service that has all songs.Experiences
If you have never been to Paris, a trip to Paris may be a peak experience. If you have been to Paris hundreds of times, a visit may be routine.Knowledge
If you know hundreds of thousands of things about baseball, learning another baseball statistic may have little value. If you know nothing about baseball, learning a fact about baseball may serve as a useful reference.Time
If you only have five minutes to talk to someone, an extra five minutes might be valuable. If you are on a 13 hour flight with someone, an extra 5 minutes of conversation might not be as valuable.Notes
The Law Of Diminishing Marginal Utility is a fundamental principle of Economics that states that as consumption increases, marginal utility declines. This is a rule of thumb that is used as an assumption to support many economic models and theories. There are exceptions to this rule. For example, a inline skating enthusiast needs exactly 8 new wheels to get back into the sport such that 1-7 wheels have no value to them and exactly 8 wheels is the peak of value.| Overview: Marginal Utility | ||
Type | ||
Definition | The value that an individual enjoys by purchasing one more item. | |
Related Concepts | ||
