ill the theory of value and prices. 31 



§ ^0. 



The mechanism above described simply gives exactness to a com- 

 mon imagery in economics, such as " margin," " price levels," 

 "planes " of demand (and supply) and: "a plentiful supply brings 

 the commodity 'within reach' of consumers." 



The notion of a cistern is also natural. Says Adam Smith : " The 

 demand for food is limited by the capacity of a man's stomach." 

 Not only is there a " limit," but the demand for food has varying 

 intensities according to the degree in which the stomach is filled. 

 The economic man is to be regarded as a number of cisterns or 

 stomachs, each relative to a particular commodity. 



CHAPTER III. 

 ONE CONSUMER (OR- PRODUCER)— MANY COMMODITIES. 



The next problem is that of the distribution of an individual's in- 

 come over all the commodities in the market. 



The income-spender considers not only the price of a given article 

 in determining how much of that article he will take but also the 

 relative advantages of using the same money for other things. 



The manner in which this consideration affects the mechanism de- 

 scribed in Chapter II is through the utility of money.* 



In the last chapter, while the price varied in relation to the quan- 

 tity of commodity, each individual's valuation or marginal utility 

 of money was regarded as constant. This is nearly true lohen only 

 one commodity is considered. In the present chapter, on the other 

 hand, the individual valuation of mone}^ varies in relation to the 

 quantity of money income, but the prices of all commodities are re- 

 garded as constant. This is nearly true when only one individual 

 is considered. 



* This sort of interaction, especially when extended to several consumers and 

 several commodities (as in the next chapter), presented the most difficulties to 

 the Auspitz und Lieben Analysis; on p. 63 in §16 they say : ** Welche Aende- 

 rung eine Einzelkurve erleidet wenn sich die Vermogensverhtiltnisse des be- 

 treffenden Individuums iindert, lasst sich im allgemeinen nicht verfolgen. Wenn 

 audi in der Eegel die Ordinaten der kurven liinger werden, wenn das Individuum 

 wolhabender wird, so wird dies doch keineswegs gleichmassig der Fall sein, vol- 

 lends nicht, wenn wir verschiedene Artikel betrachten." 



