Define the term marginal utility

Answer 1

Marginal utility refers to the additional satisfaction or benefit that a consumer derives from consuming one additional unit of a good or service. It measures the incremental increase in utility or satisfaction that an individual gains from consuming an extra unit of a product. Marginal utility is subjective and varies from person to person and from consumption context to context. As individuals consume more of a good or service, the marginal utility tends to diminish. This concept is fundamental to understanding consumer behavior and helps explain how individuals make choices and allocate their resources.