The Principles of Economics, with Applications to Practical ProblemsFetter, Frank A. (Frank Albert)
General
The Principles of Economics, with Applications to Practical Problems
Fetter, Frank A. (Frank Albert)
Economics
3. _When two agents are necessary to secure a product, the value
attributed to each is influenced by competing uses._ The thought of one
agent independently producing a certain product is far too simple to
correspond with reality. Two or more agents unite to produce a single
product, and each agent at the same time can be used for acquiring other
products. Complex as the problem appears, it is solved according to the
principle of marginal utility at every moment in every market. The
different uses, figuratively speaking, bid for an agent, and thus its
marginal utility is determined just as is the price of a good by the
bidding of buyers. Indeed, it is the bidding of buyers, indirectly. The
more urgent the use, the higher the bid. The felt importance is
reflected from the consumption goods that are sought, to the agent that
will aid to get them. Two or more agents that are mutually needed for
the acquiring of a product are complementary goods. A complementary
agent may be either other material agents or labor.
[Sidenote: Complementary agents used intensively show diminishing
returns]
When labor is applied to an agent, either to improve the Quality or to
increase the quantity, it is subject to the law of diminishing returns.
In the effort to increase the quantity of products, labor is applied
first more intensively to the better agents. If it meets with
resistance, if returns diminish, it is transferred to any of the poorer
agents that have in them uses of as high grade as those still in the
better agent. The superior effectiveness of the earlier over the later
units of the added agent is called the "differential advantage" of the
two fixed agents. The result of a day's labor applied to a field may be
represented by 100, a second day's labor by 90 (it being only ninety per
cent, as effectual), a third day's labor by 75; but it is more usual to
say that the first field produces 10 more than the second and 25 more
than the third, the second 15 more than the third. To the agent fixed in
supply is attributed the difference in the effectiveness of the agent
that is applied.
[Sidenote: The relentless extensive margin of agents]
4. _The marginal uses of indirect goods are free uses._ Here again is
noted the close parallelism in the process of evaluating direct and
indirect goods. There is an extensive margin in the use of an indirect
agent, a point in the gradation from the better to the poorer agents
where the materials and forces are left unused and have no value. Land
beyond that point is free. Outworn goods in manifold forms, old
pictures, old machines, having no longer charms even for a rummage sale,
form a no-rent margin of wealth. On every hand a great multitude of
things unused and worthless differ by only a shade from things that
still are used and valued. Every rubbish-heap, rag-bag, junk-shop, and
garret contains things once prized, now lingering on the margin of
utilization.
Public-domain text, read in full here on John Shaqi.
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