LAW V. The marginal utility of a commodity to anyone diminishes with
   every increase in the amount he has.

The total utility will, of course, increase with an increase in the amount, but at a diminishing rate.  This law is usually called The Law of Diminishing Utility.

Sec.3. Relation between Price and Marginal Utility But this is not all.  We are now in a position to perceive the true relation between utility and price.  The relation is one which exists not between price and total utility, but between price and marginal utility.  If we know only that a housewife will buy weekly 5 pounds of sugar at 8 cents per pound, but 6 pounds at 7 cents, we know nothing of the total utility of sugar to her.  We do not know how much she might be prepared to pay rather than go without 3 pounds, 2 pounds, or any sugar at all.  But we do know that, when she buys 6 pounds, the marginal utility of sugar is in her judgment worth something which does not differ greatly from the price.  We can, therefore, say in general terms that the price of a commodity measures approximately its marginal utility to the purchaser.

This statement is perfectly consistent with the paradox noted above that the most useful commodities such as bread, salt and water are very cheap.  For when we say that these commodities are supremely useful, we mean only that their total utility is very great; that, rather than do without them altogether, we would offer for them a large proportion of our means.  But we would not value very highly a small addition to the bread, water or salt that we habitually consume; nor would most of us feel it as a very serious deprivation if our consumption of these things were curtailed by a small percentage.  In other words, their marginal utilities are small, and it is only the marginal utility that has any relation to price.

Sec.4. The Marginal Purchaser.  A possible objection to the preceding argument deserves to be considered.  Some readers may find the picture I have drawn of the hesitating housewife entirely unconvincing.  They may declare that her mind does not work at all in the manner I have indicated.  She will have formed certain habits in regard to her weekly purchases of sugar, which are connected very vaguely, if at all, with any conscious processes of thought.  She will buy so many pounds of sugar weekly without troubling her head over the specific utility of the last pound she buys.  When the price falls she may, indeed, buy more; but it will not be because she separates out and considers by itself the extra utility of an additional pound.  She may buy more, because she has formed the habit of spending so much money on sugar; and now that the price has fallen, the same amount of money will enable her to buy more pounds.  Or, perhaps, she may be moved by instinctive and irresistible attraction to buy more of a thing when it is cheaper, similar to that which inspires so many people to face