Theory of marginal utility

The theory of marginal utility explains how the value or satisfaction a person gets from an additional unit of a good or service decreases as they consume more of it. For example, the first slice of pizza brings a lot of enjoyment, but the second slice is less satisfying, and each subsequent piece provides even less pleasure. This concept helps explain consumer choices and how prices are determined, as people tend to stop increasing their consumption when the extra benefit no longer justifies the cost. Essentially, it describes diminishing benefit with increased consumption to inform decision-making.