in the theory of value and prices.

21

modities, this must be the marginal utility for the year and the totalyearly purchase is the quantity which bears this marginal utility.This marginal utility or “final” degree of utility of the commodityfor the year is clearly not the utility of the last amount chrono-logically (that is Dec. 31), but the utility of the least useful partof any and each of the separate purchases.

§ 12 .

It may further be objected that there is a fitful element in theproblem which the above supposition ignores. We have supposedprices do not vary during the given period and also that the indi-vidual’s utility-estimate does n’ot vary. It may justly be claimedthat not only do prices vary from day to day, but even if they didnot, the individual’s estimate of utility is fitful and, although atthe instant he closes a bargain his estimate of utility must beregarded as corresponding to the given price, yet he is likely gen-erally and certain sometimes to regret his action so that if he wereto live the year over again he would act very differently.

This objection is a good illustration that a microscopic view oftenobscures the general broad facts. As a matter of fact the use of aperiod of time tends to eliminate those very sporadic elementsobjected to. First though prices vary from hour to hour under theinfluence of excitement and changing rumors, and from season toseason under causes meteorological and otherwise, yet these fluctua-tions are self-corrective. The general price through the year is theonly price which is independent of sporadic and accidental influences.This general price is not the arithmetical mean of the daily pricesbut a mean defined as such that had it been the constant price duringthe period the amounts bought and sold would have been just whatthey actually are. Secondly, the individual caprice is self-correc-tive. If a man lays in too large a stock of provisions this week hewill buy less next. The theory of probabilities therefore substan-tially harmonizes the theoretical and the actual. The apparentlyarbitrary suppositions regarding constancy of price, etc., may belooked upon as convenient definitions of an ideal average as justdescribed.

One observation however must not be overlooked. Althoughaccidental variations of price or choices of caprice afford both posi-tive and negative errors and thus largely cancel each other, yet theeffect on the total utility and the gain is always to diminish them.To buy too much or too little, to sell too cheap or too dear will be