Marginal enjoyment of a good declines with consumption, and a person allocates spending so that the last unit of each purchase yields equal satisfaction.
Gossen published in 1854, was ignored, and destroyed most copies. Jevons and Menger rediscovered both laws independently twenty years later, which makes it a clean case of multiple discovery.
In practice
- A subscriber pays for a service they use twice a month and would not pay again at the margin, though the first month was worth it.
- A department allocating its remaining budget across four needs stops when the last pound of each buys the same amount of relief.
- Further reading
- Wikipedia
- Subject
- Economics & Incentives
- Essay
- The theories behind every argument about money