Marginal Utility Theory
Marginal Utility Theory is an economic concept that explains how the satisfaction or utility derived from consuming an additional unit of a good or service decreases as more units are consumed. It is a fundamental principle in microeconomics, used to analyze consumer behavior, demand curves, and decision-making under scarcity. The theory helps predict how individuals allocate resources to maximize total utility based on diminishing marginal returns.
Developers should learn Marginal Utility Theory when working on applications involving economics, finance, or resource management, such as pricing algorithms, supply chain optimization, or game design with in-game economies. It provides insights into user behavior, helping to model demand, optimize features, or design systems where trade-offs and incremental benefits are critical, such as in SaaS products or data analytics tools.