7.1.2—Diminishing marginal utility

Diminishing marginal utility means that, as consumption of a good increases, the marginal utility of each successive unit tends to fall, holding other conditions constant.

Total utility can still rise while marginal utility is positive. Once marginal utility reaches zero, total utility is at its maximum; if marginal utility becomes negative, total utility falls. The pattern supports a downward-sloping demand curve in the simple model.

The first cup of water to a thirsty person may add 20 utils, the second 12, and the third 5. Total utility is still increasing, but each extra cup matters less.

Diminishing marginal utility is not the claim that every good always has the same numerical pattern or that total utility immediately decreases.