Editing Utility (section)

== Marginal utility ==
Economists distinguish between total utility and marginal utility. Total utility is the utility of an alternative, an entire consumption bundle or situation in life. The rate of change of utility from changing the quantity of one good consumed is termed the marginal utility of that good. Marginal utility therefore measures the slope of the utility function with respect to the changes of one good.<ref name=":1">{{Cite journal|last1=Castro|first1=Luiz Carvalho|last2=Araujo|first2=Antônio Souza|date=2019|title=Marginal Utility & its Diminishing Methods|url=https://journals.seagullpublications.com/ijtem/archive/f_IJ0320191627.pdf|journal=International Journal of Tax Economics and Management|pages=36–47|eissn=2618-1118}}</ref> Marginal utility usually decreases with consumption of the good, the idea of "diminishing marginal utility". In calculus notation, the marginal utility of good X is <math>MU_x=\frac{\partial U}{\partial X}</math>. When a good's marginal utility is positive, additional consumption of it increases utility; if zero, the consumer is satiated and indifferent about consuming more; if negative, the consumer would pay to reduce his consumption.<ref>{{cite web |last1=Bloomenthal |first1=Andrew |title=Marginal Utility |url=https://www.investopedia.com/terms/m/marginalutility.asp |website=Investopedia |access-date=25 April 2021}}</ref> 

=== Law of diminishing marginal utility ===
Rational individuals only consume additional units of goods if it increases the marginal utility. However, the law of diminishing marginal utility means an additional unit consumed brings a lower marginal utility than that carried by the previous unit consumed. For example, drinking one bottle of water makes a thirsty person satisfied; as the consumption of water increases, he may feel begin to feel bad which causes the marginal utility to decrease to zero or even become negative. Furthermore, this is also used to analyze progressive taxes as the greater taxes can result in the loss of utility.

=== Marginal rate of substitution (MRS) ===
Marginal rate of substitution is the absolute value of the slope of the indifference curve, which measures how much an individual is willing to switch from one good to another. Using a mathematic equation, <math>MRS=-\operatorname{d}\!x_2/\operatorname{d}\!x_1</math>keeping ''U''(''x''<sub>1</sub>,''x''<sub>2</sub>) constant. Thus, MRS is how much an individual is willing to pay for consuming a greater amount of ''x''<sub>1</sub>. 

MRS is related to marginal utility. The relationship between marginal utility and MRS is:<ref name=":1" />

: <math>MRS=\frac{MU_1}{MU_2}</math>