goods and services are obtained on1y by those individuals who are wil1ing and able to pay for them.
If there were no limits on resources, goods would have no value because we would use them until totally satisfied. Also,
the marginal utility of any good would be zero since the value
of any commodity is determined by its marginal utility. Value,
then, originates from our personal desires.
"Marginal" is the economic term for "extra." Thus, the value
of a good is measured by its "marginal utility." For example, the
marginal utility of purchasing one pair of tennis shoes may be
quite high if you currently do not have any tennis shoes, yet the
marginal utility of purchasing a second pair of tennis shoes at
the same time would be 10wer. Furthermore, if a person has
enough money for only only one pair of shoes, the shoes he
buys will cost not only the money he pays for them, but also the
satisfaction (utility) he gives up by not being able to spend that
money on something else, such as a new pair of pants. Loss of
satisfaction from the commodities a person cannot buy is called an "opportunity cost" for getting utility from what he did buy.
_ Law of Diminishing Marginal Utility
There is an economic law that states that the utility of any good
declines the more one consumes of it. Tn other words, the more we have of a good, the less we desire it. This is referred to as the
"law of diminishing marginal utility." A person who likes pizza
will receive some utility if he eats a slice of pizza for lunch. If he
eats a second piece, it provides less utility than the first one. A
third piece of pizza provides still less. Eventually, the cost of a
slice of pizza would exceed its marginal utility and the person
would not purchase more