1) One's value scale is totally (linearly) ordered:

i) 
Transitive; 
p \(\leq \) q and q \(\leq \) r imply p \(\leq \) r 

ii) 
Reflexive; 
p \(\leq \) p 

iii) 
AntiSymmetric; 
p \(\leq \) q and q \(\leq \) p imply p = q 

iv) 
Total; 
p \(\leq \) q or q \(\leq \) p 
2) Marginal (diminishing) utility, u(s), is such that:

i) 
It is independent of firstunit demand. 

ii) 
It is negative monotonic; that is, u'(s) < 0. 

iii) 
The integral of u(s) from zero to infinity is finite. 

3) Firstunit demand conforms to proportionate effect:

i) 
Value changes each day by a proportion (called 1+ε_{j}, with j denoting the day), of the previous day's value. 

ii) 
In the long run, the ε_{j}'s may be considered random as they are not directly related to each other nor are they uniquely a function of value. 

iii) 
The ε_{j}'s are taken from an unspecified distribution with a finite mean and a nonzero, finite variance. 
