Economics, 3rd Edition

marginal utility 

the addition to total utility as a result of consuming one extra unit of a good

Imagine that you have been working hard and now realize that you are very hungry. You head to the 

university canteen and buy a pizza. You eat the first slice of pizza very quickly because you are so hungry. 

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CHAPTER 5  BACKGROUND TO DEMAND: THE THEORY OF CONSUMER CHOICE  111

If you were asked to rate the satisfaction from consuming that first slice (out of 10) you might rate it as 10 

out of 10. You then turn to the second slice, that too is good but when you come to rate it you don’t give it 

quite as many out of 10 as the first slice – say you give the second slice 9 out of 10. The total utility of the 

2 slices of pizza is 19 but the additional utility of the first slice was 10 and of the second slice, 9. You  now 

consume the third slice. By now your immediate hunger has been satisfied and you find the third slice is 

not as satisfying, and you rate this as 7 out of 10. The total utility has risen to 26 but the marginal utility of  

the third slice is 7. As you finish off the remaining three slices you find you did not really enjoy the last 

slice – you might even have decided to leave part of it as you are now full. If someone now offered to buy 

you a second pizza you might refuse – eating one extra slice might just result in you being sick – if this was 

the case you might even rate this next slice as having negative utility.

The tendency for the total utility from consumption to rise but at a slower rate with additional units of 

consumption is called diminishing marginal utility.