in the theory of value and prices.

33

This follows because if the individual should vary his consumption

from such a distribution, by expending an extra dollar on A hewould divert that amount from another article or articles, say B.Then the level in the A cistern would be higher than in the B, whichinterpreted, is the dollar spent on A had less utility than if it hadbeen devoted to B.

If the stopper he pressed, i. e. if the individual had had a largerincome, the valuation of the last dollar’s worth of each commoditydecreases, or the marginal utility of money decreases. If it becomesat the maximum marginal utility of B he begins to spend on B. Asit is in the figure he “ cannot afford it.”

The amount spent on any particular commodity depends on thegeneral water level, i. e. the valuation of a dollar, while reverselythe valuation of money depends on the total amount to be spent onall commodities.

Three conditions suffice to make the distribution determinate :(1) that due to the forms of the cisterns, (2) the condition that thetotal income equals a specified amount, (3) uniformity of marginalutility (per dollar’s worth) of each commodity.

AN Ali YTIOAli.

Let A, B, C, . . . M he the (unknown) quantities of various com-modities consumed by I, and .... their (unknown) mar-ginal utilities. Let p„ p t , . . . p m he their (known) prices.

Then the above three conditions become :

(The unit of commodity is the dollar’s worth.)

(0

^ = F(B) m equations.

2 m unknowns.

(2) | Ap„ + Bp b + .... +M p m = K j.

1 equation,no new unknowns.

Tbans. Cons. Acad., Yol. Jfflt IX

3

July, 1892.