The Marginal Utility Theory

The Marginal Utility Theory suggests that the satisfaction or "utility" a person derives from consuming an additional unit of a good or service decreases as they consume more of it. In simpler terms, the first slice of pizza brings a lot of enjoyment, but by the fourth or fifth slice, the added satisfaction diminishes. This concept helps explain consumer choice and how people allocate their resources, as individuals make purchasing decisions based on the expected satisfaction of each additional item rather than the total amount consumed.