What is the definition of marginal utility

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pohnpei397 | College Teacher | (Level 3) Distinguished Educator

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Marginal utility is defined as the extra benefit that a person gets from consuming or using an additional unit of a good.

So what does this mean in the real world?  It means that marginal utility is supposed to be a way to measure how useful to you the next unit of a good or service is.  Here's an example.  Let's say that you have a big job interview lined up and you have no formal clothes at all.  You need a suit badly.  So the marginal utility of buying a suit would be high -- you would get a lot of benefit from it.  But then what if you were trying to decide whether to buy another suit?  The marginal utility would probably be lower because it would not be as valuable to you (you don't need it as urgently) as the first suit.

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