diminishing marginal utility
- noun the way in which a consumer’s satisfaction at acquiring a good diminishes as more units of the good are purchased
- (written as Diminishing Marginal Utility)A property of a utility function, to the effect that increments of a good or service are assumed to add positive but diminishing additions to total utility. It is not to be conceived of as a successive phenomenon, in which the additions take place over time (which is unfortunately how it is often introduced in textbooks) but as an instantaneous characteristic of human preferences. Now largely superseded, save in expected utility theory, by the more general (but still 'instantaneous') 'ordinalist' idea of a diminishing marginal rate of substitution in consumption or negatively-sloped indifference curve.