The Principles of Economics Part 55

If so, in what way?

10. In a time of high excitement gold was sold for more at one side of the room than at the other side; how account for this?

11. Give examples of, and reasons for, two prices in the same market.

12. What effect on prices should be expected from an invention that makes possible the carrying of fresh meat from South America to England?

13. Describe the method of selling any product you know about. What is the market in which it is sold?

NOTE.--See works cited: Smart, pp. 40-63; Bohm-Bawerk, 193-222; Wieser, 39-53.

CHAPTER 6. PSYCHIC INCOME

1. Is it possible to compare the value of the portrait-painter's service with that of the gardener?

2. To call the teacher's work unproductive, and the ditch-digger's work productive was once usual, but is so no longer; give reasons for either view.

3. It is usual to call the use of a house for business purposes a productive use, but its use as a residence an unproductive one. What reasons are there for and against this?

4. Give a list of material agents that are yielding non-material uses.

5. Give examples of personal services that are most immediately expressed as gratifications.

NOTE.--The phrase "psychic income," used here for the first time, expresses a conception long neglected, but essential to the advancement of psychological economics. The idea has been recognized in the writings of Edwin Cannan, Irving Fisher, W. M. Daniels, and perhaps of late by others. It was discussed by the author in the _Quarterly Journal of Economics_, Vol. XV, pp. 19-30, especially pp. 25-26, in an article called "Recent Discussion of the Capital Concept"

(November, 1900).

CHAPTER 7. WEALTH AND ITS INDIRECT USES

1. Give reasons for attributing exchange value to the waves of the ocean; to a waterfall, a water-wheel, a loom, a piece of cloth, a dress made of the cloth.

2. Show the connection between these things.

3. How can the use of a flock of sheep be of value to one who must return them all to the owner?

4. Why should the use of a machine that never can be a direct cause of gratification, have a value that men will pay for?

5. Give examples of wealth never becoming a direct cause of gratification, yet whose possession is greatly valued.

NOTE.--The conception in this chapter was ably presented by Bohm-Bawerk in _Capital and Interest_, Bk. III, ch. v, pp.

219-227. He does not, however, make use of it in a theory of rent.

CHAPTER 8. THE RENTING CONTRACT

1. What things beside land are rented?

2. What is the form of contract used in the renting of farms, business buildings, and residences, in the community where you live?

3. Does the rent of pianos, type-writers, or masquerade-suits depend on the value of the thing rented? Is the rental a moderate return on the investment?

4. What are the difficulties in determining tenants' improvements?

NOTE.--Various writers have recognized that social, cla.s.s distinctions had an influence on the conceptions of rent and capital in England in the eighteenth century; see Fetter, article on "The Next Decade of Economic Theory," in _American Economic a.s.sociation_, 3d ser., Vol. III, pp.

236-246, especially 243-4; also A. S. Johnson, _Rent in Modern Economic Theory_, p. 19, and references there given.

Heretofore, however, there has not been a.s.signed to the form of the contract the significance here given it. A discussion of the points at issue will be found in _The Relations between Rent and Interest_, by F. A. Fetter and others (published by Macmillan, New York, 1904), pp. 8-10, on the renting contract.

CHAPTER 9. THE LAW OF DIMINISHING RETURNS

1. Is it possible to do twice the amount of business in any store-room by doubling the stock and the force of clerks?

2. Is it possible to expand a university indefinitely by increasing the force of teachers and the equipment, without enlarging the buildings?

3. Why do men cultivate two acres instead of one? Where land is plentiful, why do not men cultivate two acres instead of one?

4. Are there any things, not free goods, that could be indefinitely increased without increasing difficulty?

5. English farmers raise thirty-five bushels of wheat per acre, Americans perhaps fifteen; why this difference?

6. Why did people go to Dakota and Iowa when there was still room in New England?

7. Why put up a twenty-story building? Why not build a fifty-story one?

NOTE.--The broad reading here given to the law of diminishing returns is so recent that even the latest texts have recognized it only in a partial manner, defining "the law" in the old terms confined to land. For the old statement see J. S. Mill, _Principles of Political Economy_ (1846), Bk. I, ch. XII. Writers even so advanced as Alfred Marshall follow Mill with no essential modification. For a good historical account of the doctrine see Edwin Cannan, _History of the Theories of Production and Distribution_, pp. 147-182 (1893; 2d ed., with additions, 1903), which advances no positive theory, but makes evident many inconsistencies in the older view. A keen a.n.a.lysis and important contribution to economic thought was made by J.

R. Commons, _Distribution of Wealth_, pp. 116-159 (1895).

John B. Clark, in various earlier articles, and in his _Distribution of Wealth_ (1900), has done more than any one else to develop the conception of "a universal law of economic variation." In magazine articles by various writers, the same idea has been developed, but no thorough-going application of it has been made in the available text-books.

CHAPTER 10. THE THEORY OF RENT

1. Is compet.i.tion severe in the renting of land in your community?

2. Give examples you have seen of a rise of rent; the cause. Of a fall of rent; the cause.

3. Does the existence of the land of California have any effect on rents in New York city? On agricultural rents in New York state?

4. If all the land on an island were equally fertile and equally convenient of access, would any of it pay a rent?

5. If you owned the Golden Gate, or the harbor of New York, could you rent it?

6. How does the hire of a team of horses resemble the rent of land?

7. How do livery charges in a college town in commencement week ill.u.s.trate the subject of rent?

8. Show how a change of circ.u.mstances may raise the rent of machinery.

NOTE.--Although most texts still present the older, narrow conception of land rent, its defects have been revealed by many critics. J. B. Clark has been the chief champion of the broader conception; _American Economic a.s.sociation_, 1st ser., Vol. III, No. 2, _Capital and Its Earnings_ (1888); and _Distribution of Wealth_, ch. IX and ch. XIII.