DEMAND

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enlarged  income  is  not  accompanied  by  a
proportional  access  of  utility  may  be  called  the
law  of  the  diminishing  utility  of  income.
Our  first  step  in  analysis  having  been  completed, ­
  we  may  now  pass  on  to  inquire  whether
any  propositions  can  be  laid  down  connecting
the  utility  of  individual  things  with  the  quantity ­
  of  them  that  a  person  possesses.  It  will  be
discerned  at  once  that  this  enquiry  can  be  conducted ­
  on  three  different  assumptions.  It  may
be  supposed  (1)  that  the  person’s  possession  of
other  things  remains  as  before  ;  (2)  that  the
person’s  income  remains  as  before,  except
for  the  addition  of  further  increments  of  the
article  in  question,  but  that  the  person  is  at
liberty  to  rearrange  the  expenditure  of  his
income  laid  out  on  other  things  if  he  so  desire,
or  (3)  that  his  income  and  the  way  in  which
it  is  spent  may  vary.
In  the  first  case  it  is  unquestionable  that  the
utility  enjoyed  by  the  person  can  only  increase,
if  it  increases  at  all,  at  a  diminishing  rate  very
soon  after  consumption  begins.  Minute  supplies ­
  of  a  thing  might  at  first  simply  whet
the  individual’s  appetite  if  they  had  any
effect  at  all,  but  as  supplies  increased  they
would  take  from  the  keenness  of  its  edge.
'  The  same  conclusion  holds  of  the  second  case.
But  about  the  third  case  there  is  some  doubt.