> the more of something you have, the less of it you want. This phenomenon is referred to as diminishing marginal utility by economists.
Okay, but I have a counter-example. Money. The people who have the most sometimes still act like penny-pinchers, and lust after even more, and haggle over the smallest things. Therefore the "law of diminishing marginal utility" is more a rule of thumb than a law.
If you own a good G, that you could use to satisfy either a desire D1, or a competing desire D2, you will logically choose to use G to satisfy the greater one of these two desires - the one with the greater subjective utility to you. Let's assume that is D1.
Now, if instead of 1 you have 2 of G, you can satisfy both D1 and D2. As we have already established that the utility you have derived from consuming the first G to achieve D1 must be greater than the utility derived from consuming the second G to achieve D2, the utility of the additional unit of G is diminished when compared to the previous one.