ABSTRACT
The significance of any given addition to our supply of a commodity or other object of desire declines as the supply increases. Its significance for any given supply is called its marginal significance. This marginal significance therefore rises or falls as the supply itself is contracted or expanded, and the margin drawn back or advanced. If there is a market price for any commodity, we supply ourselves with it till its marginal significance sinks to its market price; and seeing that all the early increments of supply have a higher value than that at the margin, though all are bought at the market price, it follows that the satisfactions we secure are worth more than the price we pay for them. Only at the margin is there a coincidence between the thing gained and the price paid for it. In more general terms, if we can exchange things f or each other or choose between them, on certain terms, then we can increase our supply of the more valued thing at the expense of the other, thereby lowering the marginal significance of one and raising that of the other, till their significance coincides with the terms on which they are obtainable as alternatives. When this point is reached there is equilibrium; and successful administration of resources consists in establishing and maintaining such equilibrium. In making these exchanges or selections we are guided by the anticipated or estimated-values of the things with which we are dealing, and if we make mistakes and fail to secure the marginal coincidence between what we have got and the terms on which we got it, the price we mistakenly paid does not affect the value 38of the thing for which we paid it. The scale on which all objects of desire are arranged and graded in a man's mind, spoken of in the last chapter, mııst be thought of as a scale of marginal values.
