CHAPTER II -- Section 4

In this brief section Hicks describes the extension of the previous section's argument to cases involving a collection of more than two commodities.  The heart of his explanation lies in the following two statements:

...[S]o long as the terms on which money can be converted into other commodities are given, there is no reason why we should not draw up a determinate indifference system between any commodity X and money (that is to say, purchasing power in general).

 and

So long as the prices of other consumption goods are assumed to be given, they can be lumped together into one commodity 'money' or 'purchasing power in general.'

Therefore all the goods other than X can be lumped together into a money commodity, and we can analyze the indifference curves between X and money just as before.

Hicks indicates that this principle has quite general applications, some of which will be pointed out later on.  For the purposes of this section, however, the application is as follows:

For the present, we shall only use this principle to assure ourselves that the classification of the effects of price on demand into income effects and substitution effects, and the law that the substitution effect, at least, always tends to increase demand when price falls, are valid, however the consumer is spending his income.