in the theory of value and prices.
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§2.
In order to simplify our discussion the following preliminary sup-positions* are made :
(1) A single isolated market large enough to prevent one man’sconsciously influencing prices.
(2) A given period, say a year.
(3) During this period the rate of production and consumptionare equal and such that stocks left over from last year and stocksheld over for next may have an influence which is unvarying orwhich is not a function of quantities produced and consumed duringthe year. Their influence is accounted for in the form of the curvesto 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 andindependently and preserves the same characteristics during theperiod, so that the forms of his utility curves do not change.
(5) All articles considered are infinitely divisible and each manfree to stop producing and consuming at any point.
(6) The marginal utility of consuming each commodity decreasesas 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 isindependent of the quantities of other commodities and likewise fordisutility.
§3.
In fig. 2 let the curve MU he drawn with axes OE and OA. Thiscurve is such that the shaded area representsany amount of the given commodity consumedby the given individual in the given period oftime, and the ordinate (drawn downward) fromO to R represents its marginal utility. The figureevidently interprets the fact that as the quantityof commodity increases its marginal utility de-creases and vice versa, f OA indicates what themarginal utility would be if only an infinitesimalquantity of the commodity were consumed.
Furthermore let a glass cistern (fig. 2) beformed having the figure OAMiN for its front
2 .