Definition of "Marginal utility"

Additional utility an individual receives when purchasing an additional unit of a commodity or service. Represents a trade off between units of cost and unit of utility. For example, an individual builds a luxury home with a swimming pool. To build a tennis court would cost $50,000 and require yearly maintenance. To add two tennis courts is extremely low, the marginal utility of building the additional tennis court at $25,000 is not enough to offset the additional cost involved. However, if it cost only $5,000 to build the additional tennis court, then there may be sufficient marginal utility to justify its construction.

image of a real estate dictionary page

Have a question or comment?

We're here to help.

*** Your email address will remain confidential.
 

 

Popular Real Estate Terms

Misuse, alteration, destruction, or neglect of land by an individual right-fully in possession that breeds a significant and permanent reduction of its value to the legal interest owned by ...

protective wall along a roof or below a terrace. ...

Rental based on a percent of sales or profit that in addition to the constant rental amount. ...

A notice, usually in writing, in which notice of termination is given by one individual or business to another. It is pursuant to a cancellation provision in a contract to forestall ...

Paneled brickwork between timber quarters, a framed wall, or partition. ...

Charges billed for services rendered. They may be on a flat basis or on an hourly rate. ...

Nineteenth-century style home architecture featuring three dimensional ornamentation, made by hand using a chisel and gouge. ...

Right of property owner to have his or her property used in satisfying a loan. Written contract of court judgment placing a lien on a parcel of property as collateral for a loan. An ...

Constructed in place by filling holes drilled through to bearing strata with concrete. ...

Popular Real Estate Questions