Marginal Utility and Coffee

Marginal utility the idea that the more the consumer receives is not necessarily better. More is not better in some situations, in fact sometimes less is more. Less coffee would amount to more satisfaction in some situations. A person may drink 5 cups of coffee against his/her will, or maybe drank on accident, or didn't know the consequences or large amounts of caffeine, now the person knows that he/she would be much more satisfied with one or at the most two cups of coffee. Marginal utility is the satisfaction a person receives from taking one more unit of the good. For coffee, the marginal utility is high from zero cups to one cup, and high as well from one cup to two cup. However, the marginal utility may diminish after the second cup. In fact the person may be dissatisfied with the third cup or fourth cup. This is where the idea of diminishing marginal utility.

Working at Starbucks I know about this first hand. I take note of the regulars who come in. They will order their first cup of brew early, and it couldn't be strong enough. Some come for a second, but it's mostly just a cup that will keep them alert until five o' clock. Some will even ask for "half-caf" or even "decaf" on the second cup. A rare few will ask for a third cup. At this point marginal utility is very low for most people.