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

Type of investment company that invests money in mortgages and various types of investment in real estate, in order to earn profits for shareholders. Shareholders receive income from the ...

Frame surrounding a door or window to block adverse weather. It may be made of wood, metal, or other material. The frame may be fixed or moveable. ...

Same as term Veterans Administration Mortgage: Mortgage guaranteed up to 30 years by the Veterans Administration to veterans meeting minimum requirements. Originally established by the ...

Within Real Estate, “nuisance” is a term used to describe any disturbance that might affect neighboring houses. Nuisance abatement is the enforcing of policies and codes that ...

Calculator having various financial functions including present value, purchase price, property appreciation, lease costs, loan and mortgage amortization. ...

A lease requiring tenants to pay all utilities, insurance, taxes, and maintenance costs. ...

Any structure projecting from a wall or other vertical element for the purpose of providing support for a weight or other object. ...

Bankruptcy declared by any insolvent person or business. In contrast to involuntary bankruptcy, which is applied for by the creditors. ...

Residing in a structure that the individual owns. ...

Popular Real Estate Questions