The total demand in the place for, say, tea, is the sum of the demands of all the individuals there.Some will be richer and some poorer than the individual consumer whose demand we have just written down; some will have a greater and others a smaller liking for tea than he has.Let us suppose that there are in the place a million purchasers of tea, and that their average consumption is equal to his at each several price.Then the demand of that place is represented by the same list of prices as before, if we write a million pounds of tea instead of one pound.(9*)There is then one general law of demand: -The greater the amount to be sold, the smaller must be the price at which it is offered in order that it may find purchasers; or, in other words, the amount demanded increases with a fall in price, and diminishes with a rise in price.There will not be any uniform relation between the fall in price and the increase of demand.Afall of one-tenth in the price may increase the sales by a twentieth or by a quarter, or it may double them.But as the numbers in the left-hand column of the demand schedule increase, those in the right-hand column will always diminish.(10*)The price will measure the marginal utility of the commodity to each purchaser individually: we cannot speak of price as measuring marginal utility in general, because the wants and circumstances of different people are different.
6.The demand prices in our list are those at which various quantities of a thing can be sold in a market during a given time and under given conditions.If the conditions vary in any respect the prices will probably require to be changed; and this has constantly to be done when the desire for anything is materially altered by a variation of custom, or by a cheapening of the supply of a rival commodity, or by the invention of a new one.
For instance, the list of demand prices for tea is drawn out on the assumption that the price of coffee is known; but a failure of the coffee harvest would raise the prices for tea.The demand for gas is liable to be reduced by an improvement in electric lighting; and in the same way a fall in the price of a particular kind of tea may cause it to be substituted for an inferior but cheaper variety.(11*)Our next step will be to consider the general character of demand in the cases of some important commodities ready for immediate consumption.We shall thus be continuing the inquiry made in the preceding chapter as to the variety and satiability of wants; but we shall be treating it from a rather different point of view, viz.that of price statistics.(12*)NOTES:
1.It cannot be too much insisted that to measure directly, or per se, either desires or the satisfaction which results from their fulfilment is impossible, if not inconceivable.If we could, we should have two accounts to make up, one of desires, and the other of realized satisfactions.And the two might differ considerably.For, to say nothing of higher aspirations, some of those desires with which economics is chiefly concerned, and especially those connected with emulation, are impulsive; many result from the force of habit; some are morbid and lead only to hurt; and many are based on expectations that are never fulfilled.(See above I, II, sections 3, 4) Of course many satisfactions are not common pleasures, but belong to the development of man's higher nature, or to use a good old word, to his beatification; and some may even partly result from self abnegation.(See I, II, sec.1) The two direct measurements then might differ.But as neither of them is possible, we fall back on the measurement which economics supplies, of the motive or moving force to action: and we make it serve, with all its faults, both for the desires which prompt activities and for the satisfactions that result from them.(Compare "Some remarks on Utility" by Prof.Pigou in the Economic Journal for March, 1903.)2.See Note I in the Mathematical Appendix at the end of the Volume.This law holds a priority of position to the law of diminishing return from land; which however has the priority in time; since it was the first to be subjected to a rigid analysis of a semi-mathematical character.And if by anticipation we borrow some of its terms, we may say that the return of pleasure which a person gets from each additional dose of a commodity diminishes till at last a margin is reached at which it is no longer worth his while to acquire any more of it.
The term marginal utility (Grenz-nutz) was first used in this connection by the Austrian Wieser.It has been adopted by Prof.
Wicksteed.It corresponds to the term Final used by Jevons, to whom Wieser makes his acknowledgments in the Preface (p.xxiii of the English edition).His list of anticipators of his doctrine is headed by Gossen, 1854.
