ECONOMIC GOODS AND THEIR VALUATION 35 



per bushel as oats. For the sake of convenience it has become 

 the custom to value all other articles in terms of one article 

 which is made by law the standard of value. In most countries 

 gold is the commodity decided upon as the standard of value. 

 The amount of gold for which a definite amount of a given 

 commodity will exchange is called the price of that commodity. 

 In other words, price is value expressed in terms of the standard 

 of value, or as we commonly speak of it, in terms of money. The 

 value of farm products may remain the same, when expressed 

 in terms of each other, and yet the prices of these products 

 may all change because of a rise or fall in the value of gold: 

 The value of a given weight of gold (25.8 grains 9 tenths fine) 

 may be looked upon as the measuring stick with which the 

 values of other products are measured. 



The exchange value of a specific good at a given time is de- 

 termined by its relative abundance, that is, by the supply in 

 relation to the demand for this good when compared with 

 other goods. 



Behind the fact of demand, as has been noted, is the more 

 fundamental fact of human wants. The desire to satisfy 

 wants impels men to produce supplies of utilities, i.e. things 

 which satisfy wants. The effort which man must put forth in 

 order to gain the means of satisfying his wants sets a limit 

 to the supply of economic goods. It usually happens that long 

 before all of the wants of a man are satisfied, the pain of exer- 

 tion becomes so great that it more than balances the possible 

 pleasure which might be produced by consuming the products 

 of further exertion. So long as there is an unsatisfied desire 

 for an article, that article will have some value placed upon it. 

 The relative intensity of the buyer's desire for an article deter- 

 mines how highly he will value it, and what price he will be 

 willing to pay for it ; but the price which must be paid deter- 

 mines how much of the goods he will take for his own use and 

 how completely the want will be satisfied. In short, the higher 

 the price the more intense will be the desire which will be left 

 unsatisfied. 



On the other hand, the natural facilities for increasing the 



