Utility and Law of Diminishing Marginal Utility
Utility can be defined as a measure of satisfaction which one derives from the consumption of goods and services. However it is very hard to measure utility for any consumer, because the same can be very useful for one and for other it can be a waste of money. For example a person who love playing games, for him owning a X box or play station is a great deal of satisfaction while for those who are not interested in games it is a nothing more than a useless thing.
Another concept which is related to utility is called law of diminishing marginal utility, according to it as the consumer increases the consumption of a good or service, while keeping other things constant there is decline in the utility or satisfaction which one derives from the usage of good or service. One of the simple examples which we experience in our daily lives is when you are felling thirsty then the satisfaction which you derive after drinking first glass of water is far greater then drinking second glass of water within few minutes, another example of law of diminishing marginal utility can be related to money, though it is correct that as individuals earn more money, he or she becomes more greedy and want to earn more, but after sometime even marginal utility of money declines.