in the theory of value and prices.

19

(7) The name utility-value of a commodity may be given to theproduct of the quantity of that commodity by its marginal utility or

dllX ‘ dx

The name is suggested from money-value which is quantity ofcommodity times its price. (Cf. § 3).

(8) The gain or consumer’s rent is total utility minus utility value.That is :

Gain

-/

x dJJ ,dxdx

U ddx

It is the actual total utility diminished by that total utility whichthe commodity would have if it were all rated at the same degree ofutility as the last or least useful increment.

It is to be observed that total utility and gain are not experiencesin time but the sum of increments of utility substitutionally succes-sive. The individual is to assign the marginal utility for the 90thloaf on the hypothesis that he were consuming 90 loaves per year, andthen abandoning this supposition to substitute successively the hy-pothesis of 91 loves, 92, 93, etc., all for the same year. That is, anumber of mutually exclusive hypotheses for the same period arethought of.

8 9.

The preceding definitions have been expressed relative to a par-ticular instant of time. This was because in actual life purchasesare made by separate instantaneous acts. But the important com-modity-magnitudes in economics are “tons per year,” “yards perday,” etc., bought, sold, produced, consumed. In order to make ourdefinitions applicable to such quantities the element of time must beintroduced. Hence the following supposition :

During the given period of time (that is, the period for whichcommodity-magnitudes are considered) the marginal utility to agiven individual of a given commodity is the same at all instants atwhich he buys or consumes it or sells or produces it.

This involves supposing that prices do not vary, for prices (as weshall see) are proportional to marginal utilities.

A housewife buys (say) 10 lbs. of sugar at 10 cts. per pound. Asshe closes the bargain she roughly estimates that the last or tenthpound is about worth its price. She did not stop at five pounds forshe wanted a sixth more than the 10 cts. it cost her. She may notbuy sugar again for a fortnight. When she does, we shall suppose