in the theory of value and prices. 



25 



In order to simplify our discussion the following preliminary sup- 

 positions* are made : 



(1) A single isolated market large enough to prevent one man's 

 consciously influencing prices. 



(2) A given period, say a year. 



(3) During this period the rate of production and consumption 

 are equal and such that stocks left over from last year and stocks 

 held over for next may have an influence which is unvarying or 

 which is not a function of quantities produced and consumed during 

 the year. Their influence is accounted for in th^form of the curves 

 to be employed just as is the influence of climate, population, polit- 

 ical conditions, etc. 



(4) Each individual in the market knows all prices, acts freely and 

 independently and preserves the same characteristics during the 

 period, so that the forms of his utility curves do not change. 



(5) All articles considered are infinitely divisible and each man 

 free to stop producing and consuming at any point. 



(6) The marginal utility of consuming each commodity decreases 

 as the amount consumed increases, and the marginal disutility of pro- 

 ducing each commodity increases as the amount produced increases. 



(7) As stated in Chapter I, § 4, the utility of each commodity is 

 independent of the quantities of other commodities and likewise for 

 disutility. 



§3. 



In fig. 2 let the curve MN be drawn with axes OE and OA. 

 curve is such that the shaded area represents 

 any amount of the given commodity consumed 

 by the given individual in the given period of 

 time, and the ordinate (drawn downward) from 

 O to R represents its marginal utility. The figure 

 evidently interprets the fact that as the quantity 

 of commodity increases its marginal utility de- 

 creases and vice versa.\ OA indicates what the 

 marginal utility would be if only an infinitesimal 

 quantity of the commodity were consumed. 



Furthermore let a glass cistern (fig. 2) be 

 formed having the figure 0AM N for its front 



This 



* These are (essentially) those of Auspitz und Lieben. 



f For the further properties of the curve MN and its relation to the curves of 

 Jevons, Auspitz und Lieben and Fleeniing Jenkin, see Appendix 1, Division II. 



