Mary Jane Sudekum, Pharm.D., and Lee C. Vermeulen, M.S. Key Words: therapeutic interchange, guidelines, drug policies, drug. procedures, pharmacy and therapeutics committee, patient care, cost-effective. therapy, American College of Clinical Pharmacy, ACCP, position statement.
The law of diminishing marginal utility is similar to the law of diminishing returns which states that as the amount of one factor of production increases as all other factors of production are held the same, the marginal return (extra output gained by adding an extra unit) decreases.
If there are multiple goods in your utility function then the marginal utility equation is a partial derivative of the utility function with respect to a specific good. Using the above example, the partial derivative of 4x/y + 2 in respect to x is 4/y and the partial derivative in respect to y is 4x.epeat this process for all the rows on the chart. Using our previous apple example, the marginal utilities of the first four rows are 0, 10-0=10, 15-10=5 and 17-15=2. Use the marginal utility values to answer questions about how the person's utility changes with various amounts of the good or service.