Supply and demand

“ Besides, a person engaging in the production of any kind of goods, can, as a rule, only seldom directly investigate the relation between supply and demand. Generally, he can do no more than compare the market price of the commodity with the cost at which he can produce it. ”

“ Let us sum up in a general form our conclusions as to the way in which changes in the supply or demand of a commodity react upon the demand or supply of the other things with which it is jointly demanded or supplied. Everything turns, as we have seen, on the possibility of variation in the proportions in which the things are used or produced together ”

“ The economists who discovered that demand created supply soon had to limit the proposition to “effective demand,” which turned out, in the final analysis, to mean nothing more than supply itself; and this holds good in politics, morals, and all other departments as well: the actual supply is the measure of the effective demand; and the mere aspirations and professions produce nothing. ”

“ One must not forget that all commerce is conditioned by the law of supply and demand, and that to avoid overloading the market with produce, production must be limited, according to circumstances, and in proportion to actual requirements ”

“ Products will henceforth be exchanged in exact ratio to the labor time they have cost. Whatever may be the proportion between supply and demand, the exchange of commodities will be always as if they had been produced proportionately to the demand. ”

“ In other words, the farmer, who is subject directly to the law of supply and demand, may get greatly diminished prices for what he has to sell and be required to pay undiminished prices for what he has to buy. ”

“ These farmers were right, however, in realizing that in order to boost the market they had to limit the supply of the product. The law of supply and demand always works. It works to the advantage of him who can limit the supply or can increase the demand. ”

“ But cost of production is the chief factor which, in the case of commodities, ultimately determines the conditions of supply. Utility, similarly, is the chief factor which ultimately determines the conditions of demand. Must not then the symmetrical relations between demand and supply be reflected in a corresponding symmetry between the utility and the costs which underlie them? Demand springs obviously from utility; the only motive for buying anything is that it will serve some real or fancied use. Can we then accord to demand so dignified and to utility so subordinate a place? ”

“ Criteria of Policy. The point has now been reached at which we must take into account the very important fact which was mentioned at the close of Chapter III. The maximum utility which the laws of supply and demand tend to bring about is a maximum total utility indeed, but one still measured in terms of money. An unequal distribution of wealth destroys any necessary correspondence between that and the maximum real utility. ”

“ The whole quantity of industry annually employed in order to bring any commodity to market, naturally suits itself in this manner to the effectual demand. It naturally aims at bringing always that precise quantity thither which may be sufficient to supply, and no more than supply, that demand. ”

“ The Laws of Supply and Demand may be thus stated: a rise of price tends to produce a greater supply and a less demand; a fall of price tends to produce a less supply and a greater demand. Conversely, an increase of supply or a decrease of demand tends to lower price, and a decrease of supply or an increase of demand to raise price. ”

“ Laws of Supply and Demand. In the next place, we must try to understand how the values of things are governed, and made to change from time to time. The principal laws which govern values are called the laws of supply and demand, and they are very important indeed. ”

“ The Value of these Commodities confirm, in the long run, to their Cost of Production through the operation of Demand and Supply. The latent influence by which the values of things are made to conform in the long run to the cost of production is the variation that would otherwise take place in the supply of the commodity. ”

“ When the demand arises, the agencies of supply, namely production and distribution, usually respond. One of the great tasks of economic organization, therefore, is to estimate the probable demand and so influence production and distribution that the supply will neither be excessive nor fall short. If there is an over-supply of any commodity, prices normally will fall. That means that goods may bring less than it costs to produce and to distribute them. One reason for the organization of industry on a large scale under great corporations is that supply can thus be kept closer to demand. ”

“ There is a demand for a certain quantity of the commodity at its natural or cost value, and to that the supply in the long run endeavours to conform. When at any time it fails of so conforming, it is either from miscalculation, or from a change in some of the elements of the problem: either in the natural value, that is, in the cost of production ”

“ The facts afford you another illustration of the great law of supply and demand,—that as you cheapen and multiply products or manufactures of any kind, so will the consumption of them increase. If pound-cake could be had at the price of corn-bread, does it not strike you that the community would consume little else? ”

“ General demand and supply are thus reciprocal to each other. But as soon as money, or general purchasing power, is introduced, Mr. Cairnes208 defines “demand as the desire for commodities or services, seeking its end by an offer of general purchasing power; and supply, as the desire for general purchasing power, seeking its end by an offer of specific commodities or services.” But many persons find a difficulty because they insist upon separating the idea of supply from that of demand, owing to the fact that producers seem to be a distinct class in the community, different from consumers. ”

“ In the daily avocations of the world, whether in commerce, in science, in literature, or in surgery, the demand is exacting, and the new discoveries in all of these branches call forth on all sides fresh incentives and caterers for the supply. The problem in all classes or professions is now how to adjust the supply, already over-abundant, to the demand. The professions are over-crowded, and, though the prizes may be great and few, the blanks are many and the list of failures is long. ”

“ The law of supply and demand is inexorable. What he may do is to improve quality, diminish cost, reduce area, find the best market and the products most sought, and increase the [30] production from a given area. If he raises the yield from 20 to 35 bushels, while the yield of his neighbor remains at 10 bushels and prices remain low, we shall soon see a fine illustration of “the survival of the fittest.” The 35 bushels will yield a fair remuneration for the work expended in production when prices are at the lowest. ”

“ General supply consists in the commodities offered in exchange for other commodities; general demand likewise, if no money exists, consists in the commodities offered as purchasing power in exchange for other commodities. That is, one can not increase the demand for certain things without increasing the supply of some articles which will be received in exchange for the desired commodities. Demand is based upon the production of articles having exchange value, in its economic sense ”

“ Manufacturing industry increases its produce in proportion to the demand, and the price falls; but the produce of land cannot be so increased; and a high price is still necessary to prevent the consumption from exceeding the supply. ”

“ It is simply commodities. Each person's means of paying for the productions of other people consists of those which he himself possesses. All sellers are inevitably and ex vi termini buyers. Could we suddenly double the productive powers of the country, we should double the supply of commodities in every market; but we should, by the same stroke, double the purchasing power.
[pg 367] Everybody would bring a double demand as well as supply; everybody would be able to buy twice as much, because every one would have twice as much to offer in exchange. ”

“ But in practice, an increase in demand may cause a change in the conditions of supply. An increase, for instance, in the demand for a commodity may give rise to a revolution in the methods of production, to the introduction of labor-saving machinery and so forth, which will eventually result in the commodity being produced more cheaply. It will certainly take a considerable time before reactions of this kind can exert an appreciable influence; and we can, therefore, feel reasonably sure that over a short period an increase in demand will raise the price. ”

“ For, even if we leave foreign competition out of account, and consider, as it were, labor throughout the world as a whole, the demand for labor is by no means inelastic. It is derived along with the demand for the other agents of production in the manner described in Chapter V. As was there shown, the greater the supply of the other agents of production, the greater is likely to be the demand for labor ”

“ The principle, that value is proportional to cost of production, being consequently inapplicable, we must revert to a principle anterior to that of cost of production, and from which this last flows as a consequence,—namely, the principle of demand and supply. ”

“ They consist also of what may be called the policy of the whole business—the quick comprehension of the fluctuating wants of the consumer, the extent to which these may be led, the extent to which they must be followed, the constant power of adjusting the supply of a commodity to the demand. ”

“ In the only remaining and by far most comprehensive class of cases, in which the Supply of Commodities and Services and Credits can be readily and indefinitely increased to meet enhanced Demand, and easily withdrawn from market and stored when Demand declines, each rise and fall of market-rate tends to be speedily checked through the mere action of Supply ”

“ As for the supply, that will always rise with facility to the amount of the demand; except in cases where nature has set limits, universal or local, or meddling statesmen have interposed their foolish restraints.' The Pamphleteer, xvii. ”

“ Production in advance of actual demand indicates nothing more than that the producers are confident that such demand exists in embryo. If they err, the Products have no market; if they have guessed aright, the volume of Products increases to meet the demand. By and large, then, demand for Consumption regulates Production; or, in Economic phrasing, supply in Production is determined by demand for Consumption.
Being continuous, the human demand for Artificial Objects to consume stimulates continuous Production; being progressive, it promotes improvement in Productive methods and accomplishments. ”

“ Whether we were dealing with the price of an ordinary commodity, with joint products, land or capital, we came across relationships which seemed altogether more fundamental than our present industrial system ”