10.That is, if a point moves along the curve away from Oy it will constantly approach Ox.Therefore if a straight line PT be drawn touching the curve at P and meeting Ox in T, the angle PTx is an obtuse angle.It will be found convenient to have a short way of expressing this fact; which may be done by saying that PTis inclined negatively.Thus the one universal rule to which the demand curve conforms is that it is inclined negatively throughout the whole of its length.
It will of course be understood that "the law of demand" does not apply to the demand in a campaign between groups of speculators.A group, which desires to unload a great quantity of a thing on to the market, often begins by buying some of it openly.When it has thus raised the price of the thing, it arranges to sell a great deal quietly, and through unaccustomed channels.See an article by Professor Taussig in the Quarterly Journal of Economics (May, 1921, p.402).
11.It is even conceivable, though not probable, that a simultaneous and proportionate fall in the price of all teas may diminish the demand for some particular kind of it; if it happens that those whom the increased cheapness of tea leads to substitute a superior kind for it are more numerous than those who are led to take it in the place of an inferior kind.The question where the lines of division between different commodities should be drawn must be settled by convenience of the particular discussion.For some purposes it may be best to regard Chinese and Indian teas, or even Souchong and Pekoe teas, as different commodities; and to have a separate demand schedule for each of them.While for other purposes it may be best to group together commodities as distinct as beef and mutton, or even as tea and coffee, and to have a single list to represent the demand for the two combined; but in such a case of course some convention must be made as to the number of ounces of tea which are taken as equivalent to a pound of coffee.
Again, a commodity may be simultaneously demanded for several uses (for instance there may be a "composite demand" for leather for making shoes and portmanteaus); the demand for a thing may be conditional on there being a supply of some other thing without which it would not be of much service (thus there may be a "joint demand" for raw cotton and cotton-spinners' labour).Again, the demand for a commodity on the part of dealers who buy it only with the purpose of selling it again, though governed by the demand of the ultimate consumers in the background, has some peculiarities of its own.But all such points may best be discussed at a later stage.
12.A great change in the manner of economic thought has been brought about during the present generation by the general adoption of semi-mathematical language for expressing the relation between small increments of a commodity on the one hand, and on the other hand small increments in the aggregate price that will be paid for it: and by formally describing these small increments of price as measuring corresponding small increments of pleasure.The former, and by far the more important, step was taken by Cournot (Recherches sur les Principes Mathematiques de la Theorie des Richesses, 1838); the latter by Dupuit (De la Mesure d'utiiite des travaux publics in the Annales des Ponts et Chaussees, 1844), and by Gossen (Entwickelung der Gesetze des menschlichen Verkehrs, 1854).But their work was forgotten; part of it was done over again, developed and published almost simultaneously by Jevons and by Carl Menger in 1871, and by Walras a little later.Jevons almost at once arrested public attention by his brilliant lucidity and interesting style.He applied the new name final utility so ingeniously as to enable people who knew nothing of mathematical science to get clear ideas of the general relations between the small increments of two things that are gradually changing in causal connection with one another.His success was aided even by his faults.For under the honest belief that Ricardo and his followers had rendered their account of the causes that determine value hopelessly wrong by omitting to lay stress on the law of satiable wants, he led many to think he was correcting great errors; whereas he was really only adding very important explanations.He did excellent work in insisting on a fact which is none the less important, because his predecessors, and even Cournot, thought it too obvious to be explicitly mentioned, viz.that the diminution in the amount of a thing demanded in a market indicates a diminution in the intensity of the desire for it on the part of individual consumers, whose wants are becoming satiated.But he has led many of his readers into a confusion between the provinces of Hedonics and Economics, by exaggerating the applications of his favourite phrases, and speaking (Theory, 2nd Edn, p.105) without qualification of the price of a thing as measuring its final utility not only to an individual, which it can do, but also to "a trading body," which it cannot do.These points are developed later on in Appendix I on Ricardo's Theory of value.It should be added that Prof.Seligman has shown (Economic Journal, 1903, pp.
356-63) that a long-forgotten Lecture, delivered by Prof.W.F.
Lloyd at Oxford in 1833, anticipated many of the central ideas of the present doctrine of utility.
An excellent bibliography of Mathematical Economics is given by Prof.Fisher as an appendix to Bacon's translation of Cournot's Researches, to which the reader may be referred for a more detailed account of the earlier mathematical writings on economics, as well as of those by Edgeworth, Pareto, Wicksteed, Auspitz, Lieben and others.Pantaleoni's Pure Economics, amid much excellent matter, makes generally accessible for the first time the profoundly original and vigorous, if somewhat abstract, reasonings of Gossen.
