Topic Videos
Diminishing Marginal Utility
- Level:
- GCSE, AS, A-Level, IB, BTEC National, BTEC Tech Award
- Board:
- AQA, Edexcel, OCR, IB, Eduqas, WJEC
Last updated 2 Nov 2019
The concept of diminishing marginal utility is covered in this short revision video.
The Law of Diminishing Marginal Utility states that if the consumption of a good or service increases, the satisfaction derived gradually increases but at a decreasing rate, to the point where it reaches zero. Total satisfaction is maximised when marginal utility is zero.
There are lots of topical examples of diminishing returns some of which have possibly significant economic and social effects. For example, the preferences of many people to take advantage of cheap clothing perhaps wearing something just once and then throw it away – this has major environmental consequences. We often find examples of diminishing marginal utility in the food and drink sector – consider the temptations of an all you can eat buffet or a decision to start and then finish off a tube of crisps! Some people become over-dependent on over-the-counter drugs whose effect might wear off with excess dosage.
You might also like
Paradox of Value
Study Notes
Utility Maximisation
Topic Videos
Pricing for diminishing marginal utility!
23rd October 2017
Test 14: A Level Economics: MCQ Revision on Utility Theory
Practice Exam Questions
Marginal decisions in economics
Study Notes
Marginal Utility and the Demand Curve
Topic Videos
4.1.2.1 Utility Theory (AQA A-Level Economics Teaching PowerPoint)
Teaching PowerPoints