3.A greater utility will be required to induce him to buy a thing if he is poor than if he is rich.We have seen how the clerk with ?00 a year will walk to business in a heavier rain than the clerk with ?00 a year.(4*) But although the utility, or the benefit, that is measured in the poorer man's mind by twopence is greater than that measured by it in the richer man's mind; yet if the richer man rides a hundred times in the year and the poorer man twenty times, then the utility of the hundredth ride which the richer man is only just induced to take is measured to him by twopence; and the utility of the twentieth ride which the poorer man is only just induced to take is measured to him by twopence.For each of them the marginal utility is measured by twopence; but this marginal utility is greater in the case of the poorer man than in that of the richer.
In other words, the richer a man becomes the less is the marginal utility of money to him; every increase in his resources increases the price which he is willing to pay for any given benefit.And in the same way every diminution of his resources increases the marginal utility of money to him, and diminishes the price that he is willing to pay for any benefit.(5*)4.To obtain complete knowledge of demand for anything, we should have to ascertain how much of it he would be willing to purchase at each of the prices at which it is likely to be offered; and the circumstance of his demand for, say, tea can be best expressed by a list of the prices which he is willing to pay; that is, by his several demand prices for different amounts of it.(This list may be called his demand schedule.)Thus for instance we may find that he would buy6 lbs.at 50d.per lb.10 lbs.at 24d.per lb.
7 " 40 " 11 " 21 "8 " 33 " 12 " 19 "9 " 28 " 13 " 17 "If corresponding prices were filled in for all intermediate amounts we should have an exact statement of his demand.(6*) We cannot express a person's demand for a thing by the "amount he is willing to buy" or by the "intensity of his eagerness to buy a certain amount," without reference to the prices at which he would buy that amount and other amounts.We can represent it exactly only by lists of the prices at which he is willing to buy different amounts.(7*)When we say that a person's demand for anything increases, we mean that he will buy more of it than he would before at the same price, and that he will buy as much of it as before at a higher price.A general increase in his demand is an increase throughout the whole list of prices at which he is willing to purchase different amounts of it, and not merely that he is willing to buy more of it at the current prices.(8*)5.So far we have looked at the demand of a single individual.And in the particular case of such a thing as tea, the demand of a single person is fairly representative of the general demand of a whole market: for the demand for tea is a constant one; and, since it can be purchased in small quantities, every variation in its price is likely to affect the amount which he will buy.But even among those things which are in constant use, there are many for which the demand on the part of any single individual cannot vary continuously with every small change in price, but can move only by great leaps.For instance, a small fall in the price of hats or watches will not affect the action of every one; but it will induce a few persons, who were in doubt whether or not to get a new hat or a new watch, to decide in favour of doing so.
1
There can be no list of individual demand prices for wedding-cakes, or the services of an expert surgeon.But the economist has little concern with particular incidents in the lives of individuals.He studies rather "the course of action that may be expected under certain conditions from the members of an industrial group," in so far as the motives of that action are measurable by a money price; and in these broad results the variety and the fickleness of individual action are merged in the comparatively regular aggregate of the action of many.
In large markets, then-where rich and poor, old and young, men and women, persons of all varieties of tastes, temperaments and occupations are mingled together,-the peculiarities in the wants of individuals will compensate one another in a comparatively regular gradation of total demand.Every fall, however slight in the price of a commodity in general use, will, other things being equal, increase the total sales of it; just as an unhealthy autumn increases the mortality of a large town, though many persons are uninjured by it.And therefore if we had the requisite knowledge, we could make a list of prices at which each amount of it could find purchasers in a given place during, say, a year.
