Marginal use
Encyclopedia
As defined by the Austrian School of economics
the marginal use of a good or service is the specific use to which an agent would put a given increase, or the specific use of the good or service that would be abandoned in response to a given decrease. The usefulness of the marginal use thus corresponds to the marginal utility
of the good or service.
On the assumption that an agent is economically rational
, each increase would be put to the specific, feasible, previously unrealized use of greatest priority, and each decrease would result in abandonment of the use of lowest priority amongst the uses to which the good or service had been put. And, in the absence of a complementarity across uses, the “law” of diminishing marginal utility will obtain.
The Austrian School of economics explicitly arrives at its conception of marginal utility as the utility of the marginal use, and “Grenznutzen” (the Austrian School term from which “marginal utility” was originally derived in translation) literally means border-use; other schools usually do not make an explicit connection.
Austrian School
The Austrian School of economics is a heterodox school of economic thought. It advocates methodological individualism in interpreting economic developments , the theory that money is non-neutral, the theory that the capital structure of economies consists of heterogeneous goods that have...
the marginal use of a good or service is the specific use to which an agent would put a given increase, or the specific use of the good or service that would be abandoned in response to a given decrease. The usefulness of the marginal use thus corresponds to the marginal utility
Marginal utility
In economics, the marginal utility of a good or service is the utility gained from an increase in the consumption of that good or service...
of the good or service.
On the assumption that an agent is economically rational
Rational choice theory
Rational choice theory, also known as choice theory or rational action theory, is a framework for understanding and often formally modeling social and economic behavior. It is the main theoretical paradigm in the currently-dominant school of microeconomics...
, each increase would be put to the specific, feasible, previously unrealized use of greatest priority, and each decrease would result in abandonment of the use of lowest priority amongst the uses to which the good or service had been put. And, in the absence of a complementarity across uses, the “law” of diminishing marginal utility will obtain.
The Austrian School of economics explicitly arrives at its conception of marginal utility as the utility of the marginal use, and “Grenznutzen” (the Austrian School term from which “marginal utility” was originally derived in translation) literally means border-use; other schools usually do not make an explicit connection.