Marginal theory of value

Marginal theory of value is the theory that the value assigned to any good is the importance attached to its use in removing some felt uneasiness and that the value of any unit of a supply of identical goods is the value assigned to the least important (or marginal) use for which the contemplated number of available units are expected to be used. This is so because a judgment of value always refers solely to the supply with which concrete choice is concerned, for it is only the use of this specific (marginal) supply that one must decide to acquire or forego. Since each additional unit of an identical good will be allocated to a lesser valued use than was previously possible, the value attached to each additional (marginal) unit will be lower than that assigned to previously held units. Conversely, with each decrease in the number of units held, there will be an increase in the value of the least important (marginal) use to which the decreased available supply can be applied. The marginal theory of value is the subjective theory of value which is basic to all the theories of the Austrian School of Economics.