https://wikimd.com/index.php?action=history&feed=atom&title=Marginal_utilityMarginal utility - Revision history2026-04-04T21:37:05ZRevision history for this page on the wikiMediaWiki 1.44.2https://wikimd.com/index.php?title=Marginal_utility&diff=5647204&oldid=prevPrab: CSV import2024-04-22T07:04:41Z<p>CSV import</p>
<p><b>New page</b></p><div>[[Image:AdamSmith.jpg|AdamSmith|thumb]] [[Image:UtilityQuantified.svg|UtilityQuantified|thumb|left]] [[Image:Richard_Whately.jpg|Richard Whately|thumb|left]] [[Image:Gabriel_Cramer.jpg|Gabriel Cramer|thumb]] [[Image:Jevons.jpeg|Jevons|thumb]] [[Image:Vilfredo_Pareto_1870s2.jpg|Vilfredo Pareto 1870s2|thumb]] '''Marginal utility''' is a concept in [[economics]] that refers to the additional satisfaction or benefit (utility) that a consumer derives from consuming one more unit of a good or service. It is a cornerstone of [[microeconomics]], particularly in the analysis of consumer choice and [[demand]]. The principle of marginal utility is used to explain how individuals make decisions to allocate their resources most efficiently.<br />
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==Concept==<br />
The concept of marginal utility is based on the understanding that the utility or satisfaction a consumer gets from consuming goods or services decreases as the quantity consumed increases. This phenomenon is known as the law of diminishing marginal utility. For example, if a person is very thirsty, they derive a high utility from drinking the first glass of water, but the utility gained from consuming subsequent glasses is likely to decrease with each glass.<br />
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==Calculation==<br />
Marginal utility is calculated as the change in total utility divided by the change in the quantity of the good or service consumed. Mathematically, it can be expressed as:<br />
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:MU = ΔTU / ΔQ<br />
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where MU is marginal utility, ΔTU is the change in total utility, and ΔQ is the change in quantity consumed.<br />
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==Importance==<br />
Understanding marginal utility helps in explaining consumer behavior in the market. It is fundamental in determining the demand curve, which shows the relationship between the price of a good and the quantity demanded. The concept also underpins the theory of [[indifference curves]] and budget constraints, which are used to analyze consumer choices in a more detailed and nuanced way.<br />
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==Applications==<br />
Marginal utility has applications beyond consumer choice and demand. It is also used in other areas of economics, such as in the theory of [[marginal utility of income]], which suggests that the utility gained from an additional dollar of income decreases as income increases. This concept has implications for understanding income distribution, taxation, and welfare economics.<br />
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==Criticism and Limitations==<br />
While the concept of marginal utility is widely used, it has faced criticism. One of the main criticisms is the difficulty of measuring utility, as it is a subjective experience. Additionally, the assumption of rational behavior in consumer choice has been questioned, with behavioral economics providing evidence that consumers do not always make decisions that maximize their utility.<br />
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==Conclusion==<br />
Despite its limitations, the concept of marginal utility remains a fundamental part of economic theory, providing valuable insights into consumer behavior, market demand, and the allocation of resources.<br />
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[[Category:Economics]]<br />
[[Category:Microeconomics]]<br />
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