Marginal utility

People use their means for the most important ends. If they have to give up a unit of their stock, they will continue to satisfy the more important ends. The satisfaction provided by the marginal unit is called marginal utility.

Law of Marginal utility
People make decisions on the margin. No one chooses between "guns" or "butter", but between a definite amount of guns and a definite amount of butter.

As an actor acquires more and more units of a good, he devotes them to successively less and less urgent ends (i.e. ends that are lower on his scale of values). Therefore the marginal utility of a good declines as its supply increases. This is the law of diminishing marginal utility.

Links

 * Marginal utility on Wikipedia
 * Diminishing Marginal Utility: It's a Law by Art Carden, October 2008
 * Marginal Utility Is Not Rocket Science by Frank Shostak, June 2007
 * Marginal Utility and Interest Formation by Frank Shostak, July 2007
 * What's Wrong with the Utility Function? by Predrag Rajsic, December 2009
 * It's the Language of Action, Not a Trick by Predrag Rajsic, February 2010
 * What Can the Law of Diminishing Marginal Utility Teach Us? by Thorsten Polleit, February 2011
 * The Implications of Human Action: Diminishing Marginal Utility and Supply-and-Demand Curves online video