34 AGRICULTURAL ECONOMICS 



Economic goods may again be classified as permanent and as 

 temporary goods according to the number of times used. For 

 example, a piece of cotton cloth may be used many times and 

 through a series of years, hence it is here called a permanent 

 good, whereas wheat flour, in the form of bread, is used but 

 once and is called a temporary good. 



There is a close relation between the degree of scarcity of 

 a good and the intensity of the desire which people will have for 

 it. Other things being equal the greater the scarcity of a given 

 good, the higher will be the intensity of the desire for it ; the 

 greater the abundance, the lower the intensity of the desire. 

 Common observation teaches us that the more completely one's 

 desires for a given article are satisfied the less he will give for 

 an additional supply of that good for his own use. The con- 

 verse of this fact is that in order to induce people to consume 

 more products it is necessary to lower the price to correspond to 

 the reduced satisfaction resulting from the additional units of 

 goods consumed. At a higher price less will be consumed; 

 at a lower price more will be consumed. 



It is obvious that the quantity of the various farm products 

 demanded will depend upon a number of conditions. Other 

 things being equal, (i) the higher the individual estimates of the 

 importance of the goods in the minds of the great mass of consumers, 

 the greater will be the demand. (2) The greater the incomes of 

 the consumers, the greater the demand for goods. (3) On the other 

 hand the very thing which great demand tends to create, namely, 

 high prices, tends to reduce the demand so that the demand 

 varies inversely with the price. 



The exchange value of goods. It has been seen that in 

 order to be economic goods, that is, goods with a value placed 

 upon them, goods must be both useful and scarce. There is a 

 great difference in the usefulness and in the abundance or 

 scarcity of different goods ; hence there is a corresponding dif- 

 ference in their exchange values. Exchange value has been 

 defined as the quantitative ratio in which goods or services are ex- 

 changed. For example, if one bushel of wheat will exchange for 

 two bushels of oats we think of wheat as worth twice as much 



