Editing Marginalism (section)

{{Short description|Concept in economics}}
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'''Marginalism''' is a theory of [[economics]] that attempts to explain the discrepancy in the value of goods and services by reference to their secondary, or marginal, utility. It states that the reason why the price of diamonds is higher than that of water, for example, owes to the greater additional satisfaction of the diamonds over the water. Thus, while the water has greater total utility, the diamond has greater [[marginal utility]].

Although the central concept of marginalism is that of marginal utility, marginalists, following the lead of [[Alfred Marshall]], drew upon the idea of [[Marginal product|marginal physical productivity]] in explanation of [[cost]]. The [[Neoclassical economics|neoclassical]] tradition that emerged from [[United Kingdom of Great Britain and Ireland|British]] marginalism abandoned the concept of [[utility]] and gave [[Marginal rate of substitution|marginal rates of substitution]] a more fundamental role in analysis.{{citation needed|date=February 2012}} Marginalism is an integral part of [[mainstream economics|mainstream economic]] theory.