# Demand Price

**DOI:**https://doi.org/10.1057/978-1-349-95189-5_224

## Abstract

Earlier economic literature doubtless contains casual usages of the phrase ‘demand price’, but its appropriation as a technical term appears to date from Alfred Marshall’s *Principles of Economics* (Marshall, 1890: see Marshall, 1920, pp. 95–101). Marshall applied the term in the contexts of both individual and market demand. Starting with a commodity (tea) purchasable in integral units of a pound’s weight, an individual’s demand price for the *x*th pound is the price he is just willing to pay for it given that he has already acquired *x* – 1 pounds. The basic assumption is that this demand price is lower the larger is *x*. A schedule of demand prices for all possible quantities (values of *x*) defines the consumer’s demand schedule. Its graph is naturally drawn with quantity on the horizontal axis. In the case of a perfectly divisible commodity, the demand price of quantity *x* must be redefined as the price *per unit* which the consumer would be willing to pay for a tiny increment, given that he already possesses amount *x*. The demand schedule then graphs as a continuous negatively sloped demand curve showing demand price in this sense as a function of *x*.

### JEL Classifications

D1### Bibliography

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