1. The law of diminishing marginal utility requires the stipulation of units of a good that are equally-serviceable to a person. A unit of a good is the amount of it a person chooses as suitable to attain an end. Equally-serviceable means that any one unit can satisfy any one end a person has. If a person has more than one equally-serviceable unit of a good, the marginal unit is the one that satisfies the least-valued end.
For example, if a person selects a gallon of water as the suitable amount to attain either his end for drinking, his end for watering his plants, or his end of washing his hands during the day and if he has two equally-serviceable gallons of water, then the marginal unit of water for him is the one he uses to water his plants and the marginal utility of water is the value the aid that unit renders in attain his end of watering his plants.
2. When a person uses a unit of means to attain an end he gives up the value of next most valuable end he could have attained with that unit. This is the dis-utility of his choice. In the above example, the dis-utility of the second gallon of water is the value of the aid in renders in attain the end of washing the person’s hands.
The term “dis-utility” is typically confined to choices a person makes in allocating his human effort. When a person chooses to apply his human effort to labor, he gives up leisure. The value of the leisure he gives up is the dis-utility of labor. A person allocates a unit of human effort to labor, then, when the marginal utility of the good produced by the unit of labor exceeds the the dis-utility of that labor.
The distinction being made here is between the distasteful aspects of performing a labor task and the opportunity costs of doing so. The distasteful aspects are included in the labor’s marginal utility and not its dis-utility. Similarly, a person might enjoy performing a labor task. Such pleasure would be included in the labor’s marginal utility.