This was asserted as a matter of fact, observed from and confirmed by experience.  But what does it signify?  To what causes is this familiar fact to be attributed?  The first stage of the answer is very ample.  The many individuals, whose purchases make up the demand for the commodity, will buy smaller quantities now that the price is higher.  Possibly some of them may cease to buy it altogether; but as a rule it would be reasonable to suppose that most people continue to buy a certain amount though a smaller amount than hitherto.  Let us turn our attention, then, to the individual purchaser, and ask ourselves why he (or let us say she) acts in the manner indicated.  The obvious answer is that the more she already has of anything, the less urgently does she require a little more of it.  If she buys 6 pounds of sugar every week when the price is 7 cents a pound, but only 5 pounds when the price is 8 cents, she shows by her action that she does not consider that the additional utility she will derive from buying 6 pounds a week rather then 5 pounds is worth as much as 8 cents.  But she shows at the same time that she thinks it worth 7 cents.  For, when the price is 7 cents, no one compels her to buy that sixth pound.  She could stop, if she chose, at five; and it may serve to make the point quite plain if we suppose her actually to hesitate before she buys the sixth.  She has hitherto, let us say, been buying 5 pounds a week at 8 cents.  To-day she enters the shop and finds the price is down to 7 cents.  She asks for her customary 5 pounds; then she pauses, and a minute later turns her order into six.  What are the alternatives which she has been weighing one against the other in that momentary pause?  Not the utility of the whole 6 pounds of sugar against the total price of 42 cents.  For she has already ordered the first 5 pounds; and the decision to buy the sixth is taken independently and subsequently.  She has been sizing up the increment of utility which a sixth pound would yield, and she decides that this is worth the expenditure of a further 7 cents.  Again, when the price was 8 cents she need not have 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:—­