in the theory of value and prices.

31

§ 10 .

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 bringsthe commodity ‘•within reach’ of consumers.”

The notion of a cistern is also natural. Says Adam Smith : “ Thedemand for food is limited by the capacity of a man’s stomach.”Not only is there a “ limit,” but the demand for food has varyingintensities according to the degree in which the stomach is filled.The economic man is to be regarded as a number of cisterns orstomachs, each relative to a particular commodity.

CHAPTER III.

ONE CONSUMER (OR PRODUCER)—MANY COMMODITIES.

§1-

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 articlein determining how much of that article he will take but also therelative 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 utilityof money was regarded as constant. This is nearly true when onlyone commodity is considered. In the present chapter, on the otherhand, the individual valuation of money varies in relation to thequantity of money income, but the prices of all commodities are re-garded as constant. This is nearly true when only one individualis considered.

* This sort of interaction, especially when extended to several consumers andseveral commodities (as in the next chapter), presented the most difficulties tothe Auspitz und Lieben Analysis; on p. 63 in §16 they say: “Welche Aende-rung eine Einzelkurve erleidet wenn sich die VermogensverhSltnisse des be-treffenden Individuums Sndert, lasst sich im allgemeinen nicht verfolgen. Wennauch in der Regel die Ordinaten der kurven langer werdenj wenn das Individnumwolhabender wird, so wird dies doch keineswegs gleichmSssig der Fall sein, vol-lends nicht, wenn wir verschiedene Artikel betrachten.”