Since it is impossible to gratify all of our wants we must from time to time make a choice and decide where we shall increase our expenditures or where curtail them. For most of our wants the choice will not be between complete satisfaction and going entirely without the appropriate good. It will rather be a question of more or less satisfaction of the want. Our choice will seldom be whether we shall starve or have our appetite for food completely satiated, or whether we shall suffer from the cold on account of lack of clothing or wear all of the clothing which we desire. It will rather be a choice as to whether we shall dine at a more expensive restaurant or at a cheaper one; whether we shall purchase a more expensive suit of clothing or a less expensive one. As our money income increases the problem will be where to apply the increase. As it decreases the problem will be where to economize in our expenditures. The margin of consumption is the dividing line between the wants that are gratified and those that are left ungratifled. This may be illustrated by the following table.

Let a, b, c, d, e, etc., represent the goods which will gratify a certain person's wants, and suppose that the first unit of a, b, c, d, e, etc., which is consumed possesses for that person the relative utilities given in the first fine; the second unit, the relative utilities of the second line, etc.

Assuming that the person's want schedule does not vary and that his income remains constant, in the course of time he will, if he acts rationally, work out a system of expenditures which will require only occasional revision, and then only at the margin of consumption. He will find out, for example, if he can just barely afford to consume four units of a, that he should consume three units of b, two of c, one of d, and none at all of e in order to get the most satisfaction out of his income, provided that all of the units cost the same. If now his income is increased so that he may purchase one more unit, it is a matter of indifference to him whether he expends the increase upon a, b, c, d, or e. If, however, a unit of e is only half as expensive as a unit of d he should not purchase a unit of d with his additional income but should purchase two units of e, since these two units will give an amount of satisfaction represented by eleven in our table, whereas a single unit of d gives a satisfaction of only seven.