Find important banking term that is useful in upcoming banking exam.
- Marginal Utility is the increase in total utility of consumption of good which results from increasing the quantity of the goods consumed by one unit.
- In other words, the marginal utility of a good or service is the gain from an increase, or loss from a decrease, in the consumption of that good or service.
- It is an important economic concept because economists use it to determine how much of an item a consumer will buy. Positive marginal utility is when the consumption of an additional item increases the total utility.