Law Of Diminishing Marginal Utility

The law of diminishing marginal utility is omnipresent in economics...everywhere, all of the time. It's the principle that runs: as consumption of something increases, the marginal utility for each unit consumed decreases.

Let’s put this idea into practice. You got a new shirt, and you’re stoked. You wear it for the first time. Super stoked. The second time, not as stoked. Eventually, it’s not “new” anymore...maybe it even becomes your dirty-work, painting-walls shirt.

Same thing with pizza: the first bite of that first slice is amazing. The last bite of the last slice of pizza is...almost regretful (you’re just so gosh-darn full now, and the pizzazz of the pizza taste is...gone).

As you consume more, each consumption period yields smaller and smaller amounts of utility for you. While the law of diminishing marginal utility exists in most places, try to keep it out of places it doesn’t belong. Like, you know...your relationship with your mom, maybe. Give her a call, would ya?