⚖️ Marginal Utility: The Science of One More
🍭 What is utility? The happiness thermometer
Imagine you have a magical thermometer that measures happiness. Economists call this utility – a number that shows how much satisfaction you get from something. A scoop of ice‑cream gives you, say, 50 utils (economists even invented a fake unit called “util”). A new video game might give you 500 utils. The more utils, the more you like it.
But utility isn’t fixed – it changes depending on how much you already have. That’s where marginal comes in. In economics, “marginal” simply means extra. So marginal utility = extra utility from one more unit.
$MU = \frac{\Delta TU}{\Delta Q}$
Where:
• MU = Marginal Utility
• ΔTU = Change in Total Utility
• ΔQ = Change in Quantity consumed (usually 1)
If your total utility jumps from 20 to 35 utils after one extra cookie, your marginal utility is 15 utils. Simple, right?
🥤 The law of diminishing marginal utility (why you get bored)
Picture this: It’s a boiling summer day. You drink your first glass of cold lemonade – amazing (30 utils). Second glass – still good (18 utils). Third glass – you’re full, maybe 8 utils. Fourth glass – you actually feel sick (-5 utils). That’s diminishing marginal utility. Every additional unit gives less extra satisfaction than the previous one.
This happens with almost everything: video games, candy, even likes on social media. Your brain gets used to the pleasure. The first bite of chocolate is bliss; the twentieth is just … chocolate.
| Glasses (Q) | Total Utility (TU) | Marginal Utility (MU) |
|---|---|---|
| 0 | 0 | — |
| 1 | 30 | 30 |
| 2 | 48 | 18 |
| 3 | 56 | 8 |
| 4 | 51 | -5 |
Notice how MU keeps falling and even becomes negative when you have too much. That’s the tipping point – where extra consumption makes you worse off.
📱 Real‑life example: Streaming service dilemma
You subscribe to a movie app. The first month you binge‑watch 10 films – huge utility. Second month, you watch 6 – still fun. Third month, you’re busy, you watch only 2. But the subscription price is the same each month.
Your decision: you compare the marginal utility of another month versus the price ($10). If the MU is lower than 10 utils (in your personal scale), you cancel. This is exactly how we allocate our budgets: we buy until $MU = Price$.
$\frac{MU_A}{P_A} = \frac{MU_B}{P_B} = ... = \frac{MU_Z}{P_Z}$
You spread your money so that the last dollar spent on every good gives the same marginal utility. If not, you rearrange your shopping cart.
❓ Important Questions (and crystal‑clear answers)
No, it applies to everything you consume: time, money, games, friendships (yes, social marginal utility exists!). Even studying: the first hour is productive, the fifth hour you remember almost nothing – diminishing returns.
Absolutely. Zero utility means you feel neutral – you don’t care about an extra unit. Negative utility (disutility) means you actually feel worse. Think of the fourth slice of cake: pleasure turns into stomach ache.
No – total utility is the whole pile of satisfaction; marginal utility is just the last piece you added. They are connected: MU is the slope of the total utility curve. When TU is flat, MU = 0.
🧩 From kids to seniors: marginal utility grows with you
🧒 Elementary level: You trade Pokémon cards. You really want a Pikachu. The first card gives huge joy; a second identical Pikachu? Not so much. That’s MU.
🧑 Middle school: You have $10. A burger ($4) gives 40 MU, a smoothie ($3) gives 24 MU, chips ($2) gives 14 MU. You compare MU per dollar: burger 10, smoothie 8, chips 7. You buy burger + smoothie.
👨🎓 High school: You learn that MU is the derivative of TU if we think in continuous math. $MU(Q) = \frac{dTU(Q)}{dQ}$. You also use it to derive the demand curve – because when price drops, you buy until MU matches the new lower price.
| Item | Price (P) | MU (last unit) | MU per $ |
|---|---|---|---|
| Burger | $4 | 40 | 10.0 |
| Smoothie | $3 | 24 | 8.0 |
| Chips | $2 | 14 | 7.0 |
Marginal utility is the invisible engine of our daily choices. It explains why we get tired of our favourite song, why all‑you‑can‑eat buffets aren’t actually unlimited joy, and why companies use “first one free” samples (your first MU is huge, you’ll buy the second). From the lemonade stand to stock market decisions, the idea of “one more” vs “how much more happy” is the core of economic thinking. Once you see the world through marginal utility, you understand that value is not absolute – it depends on how much you already have.
📚 Footnote – Terms & abbreviations
[1] Cardinal Utility Theory – the old idea that utility can be measured in absolute numbers (utils). Modern economics uses ordinal utility (ranking), but the marginal concept remains essential.
[2] Util – a fictional unit of satisfaction. No one really measures utils, it’s a teaching tool.
[3] TU / MU – Total Utility / Marginal Utility. Always remember: MU is the change in TU.
[4] Equi‑marginal principle – also called Gossen’s Second Law; it states consumers maximise utility when the marginal utility per dollar is equal across all goods.
[5] Diminishing returns – a broader concept used in production; in consumption it’s diminishing marginal utility.