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MENTAL MODEL · M4643

Diminishing Marginal Utility

Diminishing Marginal Utility
BusinessHigh supportMicroeconomics
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Version 1.0.0 · Updated 2026-07-30

CORE DEFINITION

Under the condition that other factors remain unchanged, as a consumer increases the consumption of a certain commodity, the utility increment obtained from each successive unit of that commodity decreases.

SCAFFOLDING EFFECT

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A rational principle for resource allocation. It explains why diversified consumption is rational, and also why "money is not important to the rich"—because the marginal utility of wealth diminishes. In policy and business, this supports progressive taxation and differential pricing.

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When continuously consuming the same commodity, the utility increment of each additional unit decreases, so rational people will pursue diversification and moderation.

MINIMUM ACTION

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Source support: Explicit

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    zh.wikipedia.orghttps://zh.wikipedia.org/wiki/%E5%A0%B1%E9%85%AC%E9%81%9E%E6%B8%9BZH · Explicit
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