things she buys will thus be proportionate to their prices.  But if she were to receive a legacy which gave her a much larger income to spend, she might buy larger quantities of practically every commodity; and, though she would obtain a greater total utility thereby, the marginal utility she would obtain in each direction would be smaller, in accordance with the law of diminishing utility.  The prices might not have changed; the respective marginal utilities to her of the different things would again be proportionate to their prices, but they would constitute a smaller satisfaction than before.

Thus we can only say that the prices of commodities will be proportionate to their real marginal utilities, when we are considering the different purchases of one and the same individual.  The amounts of money which different people are prepared to pay for different consumers’ goods are no reliable indication of the real utilities, the amounts of human satisfaction which they yield.  Here we must take account not only of varying needs and capacities for enjoyment, but of the very unequal manner in which purchasing power is distributed among the people.  The cigars which a rich man may buy will yield him an immeasurably smaller satisfaction than that which a poor family could obtain by spending the same amount of money on boots, or clothes or milk.  When, therefore, we compare commodities which are bought by essentially different consuming publics, their respective prices may bear no close relation to their real utility, whether marginal or otherwise.  Thus the law of diminishing utility applies to money or purchasing power, as well as to particular commodities.  The more money a man has the less is the marginal utility which it yields him; and, where the marginal utility of money to a man is small, so also will be the real marginal utility he derives in each direction of his expenditure.  The extreme inequality of the distribution of wealth gives immense importance to this consideration.  Its practical implications will be discussed in Chapter V. Meanwhile, we may express the conclusions of the present chapter by the statement that the price of a commodity tends to equal its marginal utility, as measured in terms of money, i.e. relatively to the marginal utility of money to its purchaser.

CHAPTER IV

COST AND THE MARGIN OF PRODUCTION

Sec.1. An Illustration from Coal.  We have already had occasion to note the symmetry which characterizes the relations of demand and supply to price.  This symmetry was apparent throughout the argument of Chapter II, and it was a striking feature of the diagrams which we employed to illustrate the argument.  We shall do well to cultivate a lively sense of this symmetry, for it will frequently save us from ignoring factors which have a vital bearing on the problems we are considering.  We should never leave an