Essentials of Economic Theory: As Applied to Modern Problems of Industry and Public Policy — John Shaqi
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
_How Isolated Men measure Final Utility._--If a cave dweller possesses
a store of one hundred measures of nuts, he measures the final utility
and the value of this store in the manner which we have described. If
he were to be deprived of the whole stock, he might starve, but this
fact does not afford the basis of the value which he puts on the nuts.
He measures the importance of this consumers' wealth specifically. He
tests the effect of losing one measure and no more, and finds that he
could lose the single measure without suffering greatly. The
difference between having an appetite fully satiated and having it
very nearly so is not serious.
[Illustration]
Let _AD_ represent the savage's total supply of food. _AB_ will
represent the utility of the first unit; _CD_ of the hundredth. If we
supply the food unit by unit, the utility of the successive increments
will decline along the curve _BC_. When the man has a hundred units of
food, no one unit of it is worth any more than the last one, since if
any one were taken away, the last one could be put in the place of it.
The _total absolute utility_ of the food is measured by the area
_ABCD_, but the total _value_ will be represented by the rectangle
_ADCE_. The area _EBC_ measures the surplus of utility contained in
the earlier units in the series.
_The Motive for measuring Values in Primitive Life._--Even the cave
dweller would have to measure values, and would thus have to apply the
principle of final utility, because he would need to spend his limited
productive energies in the way that would do him the most good. When
he is nearly satiated with food, he needs other things more than he
does food stuffs. If he has secured so much of one product that any
additional amount that he may get by an hour's labor would be of less
use to him than what he could get of some other product by the same
amount of labor, it is important for him to change his occupation and
produce that thing of which an additional unit--which will perhaps be
the final unit of this more desirable article--has the higher degree
of usefulness.
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