What does marginal utility refer to?

Marginal utility refers to the additional satisfaction or usefulness that a consumer derives from consuming one more unit of a good or service. This concept is central to understanding consumer choice and behavior in microeconomics. When consumers evaluate how much of a product they want to buy, they consider the incremental benefits they will receive from consuming additional units. Thus, marginal utility helps explain how consumers allocate their resources to maximize their overall satisfaction or utility.

The idea conveys that as more units are consumed, the additional satisfaction gained from each subsequent unit may diminish. This diminishing marginal utility is a key principle that influences consumer decision-making and demand. In practical terms, if someone values the first slice of pizza very highly, the second slice might still be enjoyable but not quite as much, and by the time they get to the third or fourth, their desire for more may significantly decrease.

In contrast, total satisfaction referred to in one of the options encompasses all units consumed and does not specifically focus on the additional benefit of a single unit, which is what marginal utility captures. Similarly, changes in demand due to price alterations and the minimum satisfaction required for purchasing are concepts that do not directly address the definition of marginal utility.