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 Different Classes of Purchasers cooeperate in this Price
Making._--The rule of one price for one article of course holds, and
the man who would have a clear and decisive motive for buying the A
for more than ten dollars, if he had to do so, gets the benefit of two
facts: first, that it costs only that amount in the producing, and
secondly, that competition makes the supply of it so large that it is
brought within the reach of those persons who value it at only ten
dollars. It takes two different classes of purchasers to fix the price
of this package of two articles, and their ratings fix it at twenty
dollars. Exactly the same influences regulate the price of the bundle
which includes A, B, and C. Men who buy C can afford to have a luxury,
and therefore, if they had had to do so, would have given more than
they do give for the articles of necessity and comfort. If the price
of A and B were higher than it is, they would still buy these two
things, but they would not raise their bids for C, since for this they
are marginal purchasers. This commodity is therefore sold at the price
that will just induce this class of persons to add it to their list of
consumers' goods. There is a further class in whose list of purchases
D is marginal, while A, B, and C yield a consumers' surplus in the
form of an uncompensated personal benefit.
_Different Utilities in an Article appraised as are Different Goods in
a Package._--It is an actual fact that most commodities are like these
packages of unlike articles. They are bundles of unlike utilities,
and the market actually finds a way to analyze composite things and
put a separate price on each utility. It may seem very theoretical to
say that a concrete thing, like a watch, a coat, a dining table, or a
roast fowl, is made up of such abstract things as utilities and that
each of these has its separate price; yet such is actually the fact,
and if goods were not valued in the market in this way, the prices of
all articles of comfort and luxury would be very much higher than they
are.
Public-domain text, read in full here on John Shaqi.
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