SOME DOCTRINES OF POLITICAL ECONOMY. 135 



3d? 

 1 + — 



5 5 5 . . .8 



For the increase = - ; no = : the price falls in the ratio — . 



1 + ao 4 13 13 



Sx 



^,, + T 3 5 .... . .8 



For the decrease — — = - ; « «■ - : the price rises in the ratio - . 

 1 + x 4 3 3 



25. Hitherto we have not considered the manner in which the extent of the supply is 

 determined by its causes. But it is evident that in general there is, between the quantity sup- 

 plied and the price, a relation depending upon the conditions which govern the supply, as being 

 the produce of agriculture or of manufacture, or of some other agency. 



26. So far as this dependance goes, there are three main classes of commodities 

 (J. S. Mill's Polit. Econ. i. 524). 



(a) Articles of absolutely limited and fixed supply, in which no increase of price can 

 increase the supply, as old pictures, peculiar wines, building ground in a town. 



(/3) Articles of unlimited supply with proportional labour ; as, in general, manufactured 

 articles, cottons, woollens, linens, which might be produced in unlimited abundance by a 

 proportional application of capital and labour. In these, the price or cost, in the long run, 

 and independently of temporary fluctuations, is constant ; except so far as it may be diminished 

 by improvements in manufacture or cultivation, or increased by the increased cost of the raw 

 material ; or raised for a time, and its ultimate value delayed, by want of capital or want of 

 labourers. 



(7) Articles of increased supply at increasing cost, as agricultural produce in a given 

 limited country. In such articles, every addition to the quantity produced increases the cost 

 of some portions, and therefore the price of all. To add a million quarters of corn to the 

 annual produce of a country, would raise the cost-price, it may be, 1 shilling a quarter. To 

 add a second million quarters to the produce, would raise the price still further, it may be a 

 shilling more, or two shillings above the original standard ; and so on. 



27. But it may be that the increase of cost-price goes on in a higher ratio than the 

 increased amount of produce. Thus the original standard quantity of produce being q millions, 

 and the cost-price of a unit of that quantity being p shillings, let it be supposed that, in order 

 to add to q respectively l million, 2 million, 3 million units, the price must rise at each 

 step successively by 1 shilling, 3 shillings, 5 shillings, &c. at the successive steps of extended 

 and more expensive cultivation. Then the whole rise of price at these steps above the 

 original standard will be 1,4,9, &c which are as the squares of 1, 2, 3, &c. the increase 

 of quantity. We may express this relation thus; n being a coefficient hereafter to be 

 determined, we may suppose 



q' = q(l+y), p=p(l+ny e ), 

 and we may call this the equation of increased cost of production. 



