CHAPTER 111

EXCHANGE AND MARKETS

I" the preceding chapter, attention was directed to the
relation between the valuation of each unit of a commodity
 by its owner and the supply of the commodity at
his disposal, as also to the resulting differences in the
relative valuation of different commodities, according to the
relation existing between the supply of each and the purposes
 which can be served by its use. The comparison of
the marginal utilities which the different commodities possess
 is the basis of their relative valuation. But these are
comparisons made by each person between the different
parts of his stock of wealth. The valuations made, by
different persons, of the same goods, will not be of necessity
the same, since they depend on the relation between the
supply each has and his capacity for appreciating the
services or satisfactions which the use or ownership of the
goods can procure. Different individuals, if in possession of
precisely equal supplies of the same kinds of goods, would
not necessarily make the same comparative valuations of the
goods. Before proceeding to consider how this is likely to
affect the production of goods, we may usefully examine the
results which may flow from exchange, apart from the causes
which affect the supplies of goods which are at the disposal
of various persons.
Let us suppose that two boys have been allowed to gather
fruit for themselves; the one, A, having secured apples, the
other, B, plums. They carry off their spoil and proceed to
an exchange, with more or less of businesslike bargaining.
At first, each having an abundant supply, they are not very
careful of the terms of exchange, and an apple exchanges for
RB