CHAPTER II

DEMAND AND VALUE

HE interest of modern economics centres about the
T problem of value. What are the fundamental causes
of value in commodities? Why is the value of one commodity
 great, that of another small? How can changes in
the value of a commodity be explained? The answers to
these questions will provide us with the key to the distribution
 of wealth among the classes of persons whose co-operation
 is necessary for its production. The consumer is guided
in his selection of goods for his use by a consideration of the
values which he finds placed on the different goods that can
serve his ends. His judgment of the comparative relation,
of the serviceability of the goods for those ends, and the
values of those goods, must affect his choice of goods for
consumption, if that choice is made deliberately and intelligently.
 If it be made as the result of habit, the habit reflects,
in all probability, a comparison of this kind, either by the
consumer himself, or by the class or community to which he
belongs, though the habit may persist when changes in value,
or in the serviceability of commodities, have created a
situation which would no longer justify the deliberate
selection of the goods as means to achieve the ends in
view.
The producer, too, is under the control of the values of
commodities. He will desire to direct his efforts so as to
realise as great a value for his produce as possible. In
selecting the goods to produce, and the means of production
to be employed, attention must constantly be given to the
amount of value which his output may be expected to have,
and to the amounts of the values of the goods and services