Diminishing Marginal Utility
Plain definition
Diminishing marginal utility is the principle that as a person consumes more of a good within a given period, the additional satisfaction from each extra unit tends to fall. The first unit delights; the tenth barely registers.
In economics
This is one of the most robust regularities in economics, underpinning the downward slope of demand: you will only buy more at a lower price because each extra unit is worth less to you. It also justifies progressive taxation in welfare terms — a rupee means more to a poor person (high marginal utility of income) than to a rich one.
Example
On a hot day, the first glass of nimbu pani is wonderful (marginal utility 30), the second pleasant (18), the third merely fine (8), and the fourth unwanted (negative). You gladly pay 40 rupees for the first glass but would not take the fourth free.
Diminishing marginal utility does not mean total utility falls — total utility usually keeps rising, just more slowly, as long as marginal utility stays positive. The principle only says each extra unit adds less than the one before. Total utility peaks (and then falls) only when marginal utility actually turns negative.