What Is Demishing Marginal Utility?
“Diminishing marginal utility” is the idea that more of a good thing is better, but too much of a good thing is not. For some things, increasing amounts are increasingly useful–up to a point. Then, increasing amounts are increasingly annoying, that is, less useful. The idea of diminishing marginal utility (also called diminishing returns) is that you gain less from (having or selling) the next unit than you gained from the last one. The notion of diminishing returns is a foundational notion for much of current economic theory. It predicts that economies will reach an equilibrium point where supply matches demand and prices are stable. It predicts that products in the marketplace will find their own niche based on their utility to different constituencies.
