TRANSACTIONS OF SECTION F. 



685 



lines tr and t'» arc particular cases of the ' preference-curve ' (Ibid. p. 22). If tliese 

 more general conceptions are employed, the demonstration will not require that we 

 should put the ordinate for Money, regarded as a constant measure of utility. The 

 interpretation assigned to the curves OG and OE in our second and third lignres 

 may still stand. 



(rf) KcoNOMic Equilibrium.' -By analogy with well-known physical principles, 

 economic equilibrium may be regarded as determined by the condition that the 

 advantage of all parties concerned, the integrated utility of the whole economic 

 system, should be a maximum. This maximvm is in general subject, or in technical 

 phrase relative, to certain conditions ; in particular what Jevons called the 'law of 

 indifference,' that in a market all portions of a commodity shall be exchanged at 

 the same rate. But occasionally this condition is suspended : as often as we take 



Fig. 4. 



what may be called a socialistic or utilitarian view as distinguished from that incom- 

 mensurability of pleasures appertaining to different persons, which Jevons in a 

 remarkable passage of his Theory (p. 15) has postulated. It will be found tliat this 

 postulate must be abandoned when we consider the gain of trade, as in our note (c), 

 'ir the theory of combinations, as in note (l), and on other occasions. 



In general, the first condition of a maximum, that the first term of variation 

 ■should vanish, gives the Jevonian equations of exchange, the demand curves of 

 ither writers. 



The second condition of a maximum, that the second term of variation should be 

 negative, finds its fulfilment in certain well-known projjositions which involve the 

 conception of a decreasing rate of increase, viz., the law of diminishing returns, the 

 law, or laws, of diminishing utility iind increasing fatigue. 



For some propcsitions it is proper to take account not only of the sign, but also 

 the magnitude, of the second differential of utility. Thus when Professor Walker is 



