Explain the concept of marginal utility of money.

Explain the concept of marginal utility of money.

The concept of marginal utility of money refers to the additional satisfaction or value that an individual derives from each additional unit of money they possess or receive. It suggests that as a person's wealth or income increases, the marginal utility or usefulness of each additional dollar decreases. This is because as individuals acquire more money, they tend to allocate it towards less essential or urgent needs, resulting in a diminishing marginal utility. In other words, the more money a person has, the less satisfaction or benefit they derive from each additional unit of money.