In the first chapter the standard of value was defined as that commodity in terms of which the values or ratios of exchange of all other commodities are expressed. It was also shown that these expressions of ratios always take the form of figures which represent multiples and subdivisions of a definite portion of the standard. The portion of the standard which is selected as the basis of measurement is usually given a specific name, such as a dollar, a pound sterling, a franc, a mark, or a lire, and is called the unit of value. The quantity thus selected is purely arbitrary, as well as the name given to it.

The technical term which has been universally adopted for the numerical expression of the values of commodities in terms of the standard is price. When, for example, we wish to say that the ratio of exchange between wheat and gold is as one bushel of wheat to 23.22 grains of gold, we say that the price of wheat is one dollar per bushel, because in the United States we have adopted 23.22 grains of gold as our unit of value, and have named it one dollar. When we wish to express the fact that the ratio of exchange between a pair of shoes and gold is one pair of shoes to 116.10 grains of gold, we simply say that the price of a pair of shoes is five dollars, because 116.10 is five times 23.22, our unit. In England these ratios or prices are expressed in terms of pounds, shillings, and pence, in France in terms of francs and centimes, and in Germany in terms of marks and pfennige, because these nations have adopted these names for their units of value and subdivisions respectively.