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( Marginal utility)
In economics, the marginal utility of a good or service is the utility of the specific use to which an agent would put a given increase in that good or service, or of the specific use that would be abandoned in response to a given decrease. In other words, marginal utility is the utility of the marginal use — which, on the assumption of economically rationality, would be the least urgent use of the good or service, from the best feasible combination of actions in which its use is included.[1][2] Under the mainstream assumptions, the marginal utility of a good or service is the posited quantified change in utility obtained by using one more or one less unit of that good or service. This concept grew out of attempts by economists to explain the determination of price. The term “marginal utility”, credited to the Austrian economist Friedrich von Wieser by Alfred Marshall,[3] was a translation of Wieser's term “Grenznutzen” (border-use).[1][2] Constraints are conceptualized as a border or margin. The location of the margin for any individual corresponds to his or her endowment, broadly conceived to include opportunities. This endowment is determined by many things including physical laws (which constrain how forms of energy and matter may be transformed), accidents of nature (which determine the presence of natural resources), and the outcomes of past decisions made both by others and by the individual himself or herself. A value that holds true given particular constraints is a marginal value. A change that would be effected as or by a specific loosening or tightening of those constraints is a marginal change, as large as the smallest relevant division of that good or service.[2] For reasons of tractability, it is often assumed in neoclassical analysis that goods and services are continuously divisible. In such context, a marginal change may be an infinitesimal change or a limit. However, strictly speaking, the smallest relevant division may be quite large.
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