in the theory of value and prices.
i
53
The condition that the incomes are given is:
A 1 . p a + B l . p b + . +M, . p m = K, 1
A . p a + B, . p b + .+M a . p m = K, !
i m
I
A„. p„ + B„ . p b + . +M„ . p m = K„ J
n equations,new unknowns(prices).
The utility functions (the cistern-forms) are:
c?U , d U > dU t-w,, \
= F(A 1 ); —- =F(B,);-; m =F(M.)
dA t
tfB,
tfU
£ =F(A ” ); S„ =F{B " );
d\}
dA ~ F(Aj); dB “ F(B,); ‘ ' ' ' ; dM “ F(Mj)
• S= F(M ">
mn equations.mn newunknowns(marg. ut.).
The principle of proportion is:
rfU . rfU . rfU . rfU _
<£A, ’ dB x ' dC 1 ' dM. t
f?U dV _ d IT _
dA .: '' r/B„ : . : cZM„ ”
dU dTJdA . ‘ <fB n
dU
dM»
=Pa‘Pi‘Pc-
■ Pm
J
n ( m —1)independentequations.
no newunknowns.
Total number of equations: wi + ra + wm + n (m-“ “ unknowns mn -|- m + mn+V
•1) = 2 mn + m= 2 mn + m
Therefore all magnitudes are determinate and the number of thesemagnitudes as well as the number of the equations is twice the num-ber of commodities times the number of individuals plus the num-ber of commodities.
The valuation of money for each individual can be found fromthe equations:
rfXJ_ dA,dm j — p a
(Ch.lV.ga.)
dm ,
etc.