Economics Paper on Utility


Utility means the fulfillment a person attains from consuming an item. Marginal utility is the addition made to the entire utility a person acquires after taking an extra unit (Drennan, 2006). The law of diminishing marginal utility states that as the quantity of a good consumed rises, the utility derived from the extra units, the marginal utility, decreases. As an individual takes additional units of a commodity, the extra satisfaction that he/she obtains from the extra unit on the good decreases. It is the marginal utility and not the total utility that declines with an increase in the consumption of a good (Drennan, 2006).

Individuals’ wants are unlimited in number but every want is satiable. Therefore, the more a person consumes a commodity, the less he/she wants to have more of it. The law operates under the following assumptions:

  • The units of a good should be similar in all respects
  • The unit of a good should be standard
  • No change in taste should occur during the process of consuming it
  • There should be continuity in using a commodity
  • The price of the substitute commodities must not change.

As much of a good is taken, the strength desire declines and the utility obtained from the extra unit (Dittmer, 2005).

For example, after playing hockey with my friends last week, I felt very thirsty. On consuming the first glass of water, I got 10 units of utility since I was thirsty. On taking the second one, my marginal utility reduced to 8 units because the thirst was partially satisfied. The process continued until the marginal utility was zero. The marginal utility became negative on the fourth glass since the thirst had been fully satisfied.


Drennan, M. (2006). Economics: Diminishing Marginal Utility. Challenge, 49(5), 71-91.

Dittmer, T. (2005). Diminishing marginal utility in economics textbooks. The Journal of Economic Education36(4), 391-399.