Marginal Utility


Definition of "Marginal utility"

Petrina Floody
Petrina Floody Keller Williams Realty-Boston South

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.

Have a question or comment? We're here to help.

 
 
 
*** Your email address will remain confidential.
 
 

Search Real Estate Terms

Popular Real Estate Terms

Popular Real Estate FAQ