Definition: Consumers will buy as much as pleases them, with their income. As each additonal unit is purchased, the excess satisfaction gained from each purchase decreases, until it becomes irrational to continue purchasing. For example, one slice of pizza may give you much satisfaction, as does the second slice. The third slice makes you extremely full, while the fourth slice makes you nauseous. At this point, it becomes irrational for you to purchase additional slices of pizza.

• "Utility": satisfaction or pleasure one gets from consuming it.
  • Utility is subjective, as a specific product can vary from person to person.
  • Ex. eyeglasses have utility to someone who has poor eyesight but has no utility with a person with perfect vision.
  • Utils - imaginary unit of measurement for utility
  • Utility is not the same as "usefulness"

• Total Utility: TU the total amount of satisfaction or pleasure a person derives from consuming some specific quantity.Total Utility is equal to all of the marginal utilities added together.
• Marginal Utility: the extra satisfaction a consumer realizes from an additional unit of that product.
• Consumers want to maximize the total utility not marginal utility.

• Marginal Utility and Demand: The diminishing marginal utility provides a simple rationale for the law of demand. Itsupports the idea that price must decrease in order for quantity demand to increase. Therefore, the downward slope of the demand slope is due to the behavior of consumers, as well as the decreasing amount of marginal utility for each good purchased. There are many factors that affect this, including price of good and the situation utility of each good.