PRINCIPLES OF VALUE AND PRICE 425 



We have seen that the only universal law as to a person's desire 

 for a commodity is that it diminishes, other things being equal, with 

 every increase in his supply of that commodity. But this diminution 

 may be slow or rapid. If it is slow, the price that he will give for the 

 commodity will not fall much in consequence of a considerable increase 

 in his supply of it; and a small fall in price will cause a comparatively 

 large increase in his purchases. But if it is rapid, a small fall in price 

 will cause only a very small increase in his purchases. In the former 

 case his willingness to purchase the thing stretches itself out a great 

 deal under the action of a small inducement: the elasticity of his 

 wants, we may say, is great. In the latter case the extra inducement 

 given by the fall in price causes hardly any extension of his desire to 

 purchase: the elasticity of his demand is small. 



And as with the demand of one person, so with that of a whole 

 market. The elasticity of demand in a market is great or small accord- 

 ing as the amount demanded increases much or little for a given fall 

 in price and diminishes much or little for a given rise in price. 



The case of necessaries is exceptional. When the 'price of wheat 

 is very high, and again when it is very low, the demand has very little 

 elasticity: at all events if we assume that wheat, even when scarce, 

 is the cheapest food for man; and that, even when most plentiful, 

 it is not consumed in any other way. We know that a fall in the price 

 of the quartern loaf from 6d. to 4^. has scarcely any effect in increasing 

 the consumption of bread. With regard to the other end of the scale 

 it is more difficult to speak with certainty, because there has been no 

 approach to a scarcity in England since the repeal of the corn laws. 

 But, availing ourselves of the experience of a less happy time, we may 

 suppose that deficits in the supply of i, 2, 3, 4, or 5 tenths would cause 

 a rise in price of 3, 8, 1 6, 28, or 45 tenths, respectively. Much greater 

 variations in prices indeed than this have not been uncommon. Thus 

 wheat sold in London for ten shillings a bushel in 1335, but in the 

 following year it sold for ten pence. 



There may be even more violent changes than this in the price of 

 a thing which is not necessary, if it is perishable and the demand for 

 it is inelastic: thus fish may be very dear one day, and sold for manure 

 two or three" days later. 



Water is one of the few things the consumption of which we are 

 able to observe at all prices, from the very highest down to nothing 

 at all. At moderate prices the demand for it is very elastic. But 

 the uses to which it can be put are capable of being completely filled, 



