Purchase price

“ Labor was the first price, the original purchase-money that was paid for all things. It was not by gold or by silver, but by labor, that all the wealth of the world was originally purchased; ”

“ With respect to the first of these propositions, it may be observed, that the cost of any article to the purchaser includes, besides the ratio of the supply to the demand, another element, which, though often of little importance, is, in many cases, of great consequence. The cost, to the purchaser, is the price he pays for any article, added to the cost of verifying the fact of its having that degree of goodness for which he contracts. ”

“ The more of a particular commodity he has the lower his subjective valuation of a unit of that commodity; the more money he owns the lower his estimation of a dollar and the higher his subjective prices; and vice versa. Through a process of competition, selection, and adaptation, some of these subjective prices develop into market prices, that is, prices at which both buyer and seller benefit, and at which therefore an exchange takes place. To paraphrase an old adage, the proof of the market price is in the exchange. ”

“ The price is a consideration wholly for the vendor, and the value a consideration wholly for the purchaser. Hence it follows that both value and cost enter into a bargain, even when legitimately made. But value goes solely to determine the demand, and is solely cognizable by the purchaser or consumer—by him who receives; while cost (or burden) goes to determine the price, and is solely cognizable by the seller or producer—by him who renders. ”

“ To prevent abuses in the sales of these manufactures, their prices, which are determined upon a calculation of what they cost, and a certain per cent. added for the profits of the house, are marked upon the goods, and are never altered; and a regular account is kept of all, even of the most inconsiderable articles sold, in which not only the commodity, with its quality, quantity, an price, is specified ”

“ Supply and demand, cost of production, the capitalization theory, the imputation theory—the general laws of the concatenations and interrelations of prices—are quite adequate for the confutation of the quantity theory. They are laws concerned with particular prices, and the price-level is nothing but the average of particular prices. ”

“ The buyers must be supposed as studious to buy cheap, as the sellers to sell dear. The values and prices, therefore, to which our conclusions apply, are mercantile values and prices; such prices as are quoted in price-currents; prices in the wholesale markets, in which buying as well as selling is a matter of business; in which the buyers take pains to know, and generally do know, the lowest price at which an article of a given quality can be obtained; and in which, therefore, the axiom is true, that there cannot be for the same article, of the same quality, two prices in the same market. ”

“ Much of their reasoning goes no farther than to explain one price in terms of other prices. If we attempt to explain the money price of a finished product in terms of the money prices of its raw materials and other money costs of prices of production, it is clear that we merely shift the problem. We have still to explain these antecedent prices. ”

“ Price-making generally precedes the demand upon the media of exchange, and does not at all imply any necessary demand at the moment upon the standard in which the prices are expressed.... The offer of money for goods is only a resultant of price-making forces previously at work, and does not measure the demand for goods.... ”

“ Each "supply curve" or "demand curve" rests upon the unconscious assumption of a price level already existing. Although the curves relate to a commodity, they relate to it only as compared with money. A price is a ratio of exchange between the commodity and money. The money side of each exchange must never be forgotten nor the fact that money already stands in the mind of the purchaser for a general purchasing power. ”

“ This will be a useful note to the next edition of "Ricardo." [The price depends on the relative forces of the buyer and the seller. The price asked by the seller no doubt depends on the labor expended. The price given by the buyer depends on the degree in which he desires to possess the thing sold, which has nothing to do with the labor laid out on it.] ”

“ The higher we find the prices of goods, the smaller the quantities that can be bought by a given amount of money, and therefore the lower the purchasing power of money. In short, the purchasing power of money is the reciprocal of the level of prices; so that the study of the purchasing power of money is identical with the study of price levels.
§ 2 II.13 Overlooking the influence of deposit currency, or checks, the price level may be said to depend on only three sets of causes: (1) the quantity of money in circulation ”

“ Those who place such implicit reliance on the competency of supply and demand to fix prices, irrespective of the quantity of money, deposits, velocity, and trade, will have their confidence rudely shaken if they will follow the reasoning as to price causation of separate articles. They will find that there are always just one too few equations to determine the unknown quantities involved.*7 The equation of exchange is needed in each case to supplement the equations of supply and demand. ”

“ Turning to the goods side of the equation, we have to deal with the prices of goods exchanged and quantities of goods exchanged. The average*17 price of sale of any particular good, such as bread, purchased in the given community during the given year, may be represented by p (price) ”

“ A low price does not automatically constitute, from the customer's viewpoint, a high value. The price of an article is fixed by the dealer. The value of that article is fixed by the buyer, since it depends, not upon what the article costs to make or what is asked for it, but upon what it is worth to her. ”

“ If, speaking broadly, and embracing somewhat longer periods, all descriptions of commodities sell at their respective values, it is nonsense to suppose that profit, not in individual cases, but the constant and usual profits of different trades, spring from the prices of commodities, or selling them at a price over and above their value. ”

“ The market price may rise above or fall below the amount so fixed, being determined by the proportion between the quantity brought to market and the demand of those who are willing to pay the natural price. ”

“ Although every buyer and seller who bids or offers a price for a particular commodity tacitly assumes a given purchasing power of the money bid or offered, he is usually as unconscious of so doing as the spectator of a picture is unconscious of the fact that he is using the background of the picture against which to measure the figures in the foreground. ”

“ When the merchant sells his goods to the retailer or consumer, he adds the tariff to his freight, insurance, interest, etc., as direct purchase cost. This is strict business, but the consumer pays all the bills with the profit added. ”

“ Things have their wholesale and retail prices. True, these vary more or less, from accidental causes, such as the abundance or scarcity of the article, the state of the money market, or the season of the year. Buyers, by watching these accidental influences, may purchase more or less to their advantage. ”

“ Besides, one could not always depend on goods being supplied a second time at the same price. If, for example, the merchants supply a sample of doorknobs, and quote a price, and an additional order is given for ten or fifty gross, they will in all probability increase the price ten per cent. ”

“ All these purchases have exactly the same effect on price, as if they were made with ready money. The amount of purchasing power which a person can exercise is composed of all the money in his possession or due to him, and of all his credit. ”

“ In other lines of business, commonly occupied with the production of staple goods, this constituent of cost may perhaps fall below ten per cent of the total. Where the average, for the price of finished goods delivered to the consumers, may lie would be a hazardous guess. ”

“ How Different Classes of Purchasers coöperate in this Price Making.—The rule of one price for one article of course holds, and the man who would have a clear and decisive motive for buying the A for more than ten dollars, if he had to do so, gets the benefit of two facts: first, that it costs only that amount in the producing, and secondly, that competition makes the supply of it so large that it is brought within the reach of those persons who value it at only ten dollars. ”

“ The great law of price is determined by supply and demand. Whatever affects either, affects the price. If the supply is increased, the demand remaining the same, the price declines; if the demand is increased, the supply remaining the same, the price advances; if both supply and demand are undiminished, the price is stationary, and the price is influenced exactly in proportion to the degree of disturbance to the demand or supply. ”

“ Each time a pile has risen, the average level of all has fallen.
VIII.75 The proposition that a general increase in demand, resulting in an increase in trade, tends to decrease and and not to increase the general level of prices, may be regarded as a sort of pons asinorum to test one's knowledge of the fundamental distinction between those influences affecting the general price level and those affecting the rise and fall of a particular price with respect to that level. ”

“ Instead of one price, every one who had commodities or services to sell adopted a scale of at least four prices: “pay price,” “money price,” “pay as money price,” and a “trusting price;” and the seller, before fixing his price, invariably asked his customer how he would pay.6 “Pay price” was barter; “money price” was payment in foreign coin; “pay as money” was in the ideal money of the island; “trusting” was an enhanced price, according to time. Thus, supposing a customer wanted a knife, its price in “pay” would be a bushel of corn; in “money price,” a fifty-cent gold or silver coin ”

“ In regular business, as a rule, the seller's price on his wares must be more than their cost to him; when goods are sold, the price the buyer has paid becomes their cost to himself. In exceptional cases, when goods are sold at cost, the seller's price is made the same as the cost of the goods to him, the cost to the seller and the cost to the buyer becoming then identical. ”

“ If the supply, or present stock in hand, be entirely in the possession of one person, he will naturally endeavour to put such a price upon it as shall produce by its sale the greatest quantity of money; but he will be guided in this estimate of the price at which he will sell, both by the knowledge that increased price will cause a diminished consumption, and by the desire to realize his profit before a new supply shall reach the market from some other quarter. ”

“ It is, therefore, a great error to suppose that an existing or new duty necessarily becomes a component element to its exact amount of price. If the proportions of demand and supply are varied by the duty, either in augmenting the supply, or diminishing the demand, or vice versa, price is affected to the extent of that variation. ”

“ Thus also, when, in anticipation of a scarcity of some one commodity, a merchant so raises the price as essentially to diminish the sale, he earns his increased profits; for an enhanced price is the only practicable check on consumption. ”

“ They do so in terms of Price when measured by Money; they do so in the essentials of Value when measured by comparisons of commodities. As a rule, however, Money-prices are fair guides to Commodity values. Commodity values rise and fall according to cost of production, inclusive of delivery; and in so far as Money is stable, the rise and fall in prices is evidence of variations in production cost.
The relative rise and fall in Value, be it measured by prices in Money or otherwise, is so common a phenomenon of Trade that critics might be pardoned for denying a Value level. ”

“ How the Normal Price of a Single Good in a Bundle of Unlike Goods would be Fixed.—Let us see how a bundle made up of commodities A, B, C, and D would get its value in the market. We will suppose that these articles are here named in the order of their importance, and that A has the highest utility, since it renders the most important service, and that D has the least. It may be that the article A has a utility rated at one hundred dollars in a particular man's esteem. ”

“ The money price of an article at any given period is usually stated to depend upon the proportion between the supply and the demand. The average price of the same article during a long period, is said to depend, ultimately, on the power of producing and selling it with the ordinary profits of capital. ”

“ It is quite obvious that these things are of use, are, indeed, indispensable for production; what more natural than that capital should command a price? It almost seems as though we might pass, without further ado, to a detailed discussion of the forces which determine the amount of this price. ”

“ Is it quite understood that there are two prices for these articles-a cash price, and a price in goods?-Yes; I think that is quite understood. Of course, if a woman comes in with a shawl for which she is willing to take 20s. in goods, she would be equally willing to take 16s. or 17s. in cash, because the difference between the 16s. or 17s. in cash and the 20s. in goods represents the retail draper's profit, which is supposed to run from 15 to 20 or 25 per cent. ”

“ On an upward market, perhaps, a higher price can be secured than the marked price. On a downward market or in order to move certain colors and styles, it is necessary to mark down from the original sale price. ”