DEMAND 
41 
buy a thing, considered together. It is com 
pounded, of course, of individual demands 
and obeys the same law. The lower the 
price the larger will be the amount bought. 
Those who purchased before will purchase more 
because of the law of diminishing utility ; and 
some who previously found the price too high 
for them will be enabled to buy a little. 
In the study of many economic problems 
it will be found that the so-called elasticity of 
demand is an exceedingly fruitful conception. 
It applies both to individual demand and 
compound demand. Demand is said to be 
very elastic when a small drop in price 
causes a large addition to the amount sold. 
It is said to be only slightly elastic when a 
small drop in price means a small addition 
to the amount sold. Because of the law of 
demand formulated above, when price drops 
sales are bound to be augmented to some 
extent. In order to enable us to distinguish 
unhesitatingly between a comparatively elastic 
demand and a comparatively inelastic one, 
it is usual to adopt a conventional definition 
of the point at which the one becomes the 
other. This point plays the same part as 
freezing point with reference to temperature. 
Degrees of heat or coldness can be measured 
with reference to freezing point. So degrees