The Demand Curve and Utility

Utility is an economic measure of how valuable, or useful, a good or service is to a consumer.

The theory of utility states that, all else equal, a rational person will always choose the option that has the highest utility.

Marginal utility of a good or service is the gain from an increase or loss from a decrease in the consumption of that good or service.

The principle of diminishing marginal utility states that as more of a good or service is consumed, the marginal benefit of the next unit decreases.