Essentials of Economic Theory: As Applied to Modern Problems of Industry and Public PolicyClark, John Bates
General
Essentials of Economic Theory: As Applied to Modern Problems of Industry and Public Policy
Clark, John Bates
Economics
5. _Changes in Consumers' Wants._--The wants of consumers are
changing. They are growing more numerous as well as more refined and
intellectual. This expansion of desires follows the general increase
of productive power, since every one already wants some things that he
cannot procure, and all society has a fringe of ungratified wants just
beyond the limit of actual gratification. Even if all these wants that
are now near the point of actual satisfaction were to be satisfied,
the desires would at once project themselves farther. The mere
increase in earning power without any special education enlarges the
want scale, but intellectual and moral growth cooeperates with it in
that direction and calls latent wants into an active state. More and
more eagerly do men seek things for which the desire was formerly
dormant. Changes of this kind affect values, cause labor and capital
to move from group to group, and thus cause society as a whole to
produce less of some things and more of others. They sometimes cause
wholly new groups to appear, and draw workers and equipment from the
old ones.
[Illustration]
_Advantage of Diversity of Wants._--One very marked effect of the
diversification of wants is to increase the aggregate utility of a
mass of commodity produced with a given expenditure of labor. Measure
the whole wealth available for consumption on the basis of the labor
that it takes to create it, and it will appear that it has more
utility and is worth more to society in consequence of this evolution
that is going on in the nature of the individual consumer. A given
amount of labor benefits most the men whose wants are of the most
varied character. If _A_, _B_, and _C_ are three commodities, and if
their several utilities decline, as successive units of them are given
to a consumer, along the curves descending from the letters _A_, _B_,
and _C_ of the diagram, it is clear that the man whose consumption is
confined to the commodity A gets less benefit from three units of
wealth than does the man who consumes _A_, _B_, and _C_. The utility
of the first unit of _A_ is measured by the vertical line from _A_ to
the line _DE_, that of the second by the line from _A'_ to _DE_, and
that of the third by the line from _A''_ to _DE_. The utility of the
first unit of _B_ is measured by the distance from _B_ to the line
_DE_ and exceeds that of the second unit of _A_ by the difference
between the lengths of those lines. In like manner the utility of _C_
exceeds that of the third unit of _A_ by the difference between the
length of the line descending from C and that of the one descending
from _A''_. The declining utility of the income of the man who
satisfies three wants is represented by the slowly descending curve
_ABC_, while the diminishing utility of the income of the man who
satisfies only one want declines along the sharply descending curve
_A_, _A'_, _A''_.[1]
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