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Marginal Utility

In economics, marginal utility refers to the additional satisfaction or benefit a consumer receives from consuming one more unit of a good or service. It is the change in total utility derived from consuming an additional unit.For example, if consuming the first slice of pizza provides 10 units of utility and consuming the second slice provides 8 units, the marginal utility of the second slice is 8 units.

The concept of marginal utility is crucial in understanding consumer behavior, as it explains why people are generally willing to pay less for additional units of a good or service. As consumption increases, the marginal utility typically decreases, reflecting the diminishing satisfaction experienced from consuming more of the same good or service. This phenomenon is known as the law of diminishing marginal utility.

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