202 Professor Whewell on the Matliematical Exposition 



duced except it pays the cost of production with the profit; if 

 it pay less, the capitalist will abstract his capital from such an 

 employment, the supply will be diminished, price will rise. No 

 article again which any capitalist can produce will permanently 

 have a price higher than that which repays the cost of production 

 with profits. If it have, capital flows to tliat employment, supply 

 increases,. prices fall. Hence it appears, that the cost of production 

 determines permanent price, and this is our fifth xlxiom. 



Axiom 5. The rate of price of any article will he such that 

 the whole price of any portion is equal to the capital employed 

 to produce it together with the usual profits. 



We here speak of the permanent profits, and indeed in the 

 whole of these speculations we consider, as authors on the subject 

 are in the habit of doing, a theoretical condition in which these 

 Axioms are* exactly satisfied. This is a state of equilibrium to 

 which in practice things are perpetually tending, but which they 

 never reach. 



11. Having thus two Axioms on the subject of prices, it 

 may be desirable to see how they are consistent. Price is deter- 

 mined by the conflict of supply and demand ; price is also 

 determined by the cost of production, in which latter expression 

 demand is not mentioned: how then do these agree? In answer 

 to this it is to be observed, that the former is the immediate, 

 the latter the permanent, determination of price. The price to- 

 day is that which arises fiom the bargaining of to-day's buyers 

 and sellers, that i^, from the intensity of demand and the extent 

 of Uie supply. But this price cannot be long above or below the 

 co.st of production, for the reasons already mentioned. This cost is 

 the permanent and ultimate regulator of price. And the demand 

 will affect the extent of supply ; and if the cost of production 

 vary with the extent of production, as, for instance, in the case of 

 land of different fertilities, the demand affects the cost, and the 



