bought as many as 5 pounds. She could have stopped at 4 had she
chosen, and the fact that she did buy 5 pounds shows that the
increment of utility derived from buying a fifth pound, when she might
be said already to have 4, was worth at least 8 cents in her judgment.

This trite illustration enables us to lay down two important laws
relating to utility. To state them shortly, it is convenient to employ
one or two technical terms, which, unlike every term employed
hitherto, are not very commonly used in their present sense in
everyday life. Their adoption is desirable not merely for the sake of
convenience, but because they help to stamp clearly on the mind a most
illuminating conception, that of the "margin," which supplies the clue
to many complicated problems. The last pound of sugar which the
housewife purchased, the fifth pound when the price was 8 cents, or
the sixth pound when the price was 7 cents, we call the "marginal"
pound of sugar. And the increment of utility which she derives from
buying this marginal pound we call the "marginal utility" of sugar to
her. We are thus able to state the fact that the more a person has of
anything the less urgently does he require a little more of it, in the
following formal terms:--

LAW V. The marginal utility of a commodity to anyone diminishes with
every increase in the amount he has.

The total utility will, of course, increase with an increase in the
amount, but at a diminishing rate. This law is usually called The Law
of Diminishing Utility.


§3. _Relation between Price and Marginal Utility_ But this is not