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Economics

Student Videos

Marginal Utility and the Demand Curve

Level:
GCSE, AS, A Level, IB, BTEC Level 3, BTEC Tech Award
Board:
AQA, Edexcel, OCR, IB, Eduqas, WJEC

The theoretical relationship between marginal utility and the demand curve is explored in this short video.

Marginal Utility and the Demand Curve

Let us assume that consumers can attach a value to the utility they get from consuming extra units of a good or service. The marginal utility they get will therefore influence their willingness to pay for something. If there are diminishing marginal returns, then people’s willingness to pay will also decline. Hence the individual demand curve will be downward-sloping. Price and quantity demanded for most goods and services will be inversely related.

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