Diminishing marginal utility

The law of diminishing marginal utility applies: as the rate of consumption increases, the marginal utility derived from consuming additional units of a good will decline.    Utility is a term economists use to describe the subjective personal benefits that result from taking an action. The law of diminishing marginal utility  states that the marginal (or additioanal) utility derived from consuming successive units of a product will eventually decline as the rate of consumption increases. For example, the law says that even though you might like ice cream, your marginal satisfaction from additional ice cream will eventually decline as you eat more and more of it. Ice cream at lunchtime might be great. An additional helping for dinner might also be good. However, after you have had it for lunch and dinner, another serving as a midnight snack will be less attractive. When the law of diminishing marginal utility sets in, the additional utility derived from still more units of ice cream declines.
The law of diminishing marginal utility explains why, even if you really like a certain product, you will not spend your entire budget on it. As you increase your consumption of any good, including those that you like a lot, the utility you derive from each additional unit will become smaller and smaller and eventually it will be less than the cost of the unit. At that point, you will not want to purchase any more units of the good.

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