Sept. 19, 1889] 



NATURE 



507 



that " this, not the ' rent of ability,' is the real keystone of the 

 arch " {lb., p. 17). From the point of view here taken (above, 

 p. 497) this search for the " keystone" among the factors of dis- 

 tribution is nearly as hopeless as the speculation of the ancients 

 about the real up or dozvn. 



(J) Determinateness of Econo- 

 mic Equilibrium. — To investigate the 

 possibility of there being more than 

 one rate of exchange at which the sup- 

 ply is just carried off by the demand, 

 let us consider the most favourable or, 

 at least, the most familiar case in which 

 there may be two scales of production, 

 and therefore two series of terms on 

 which the producer is willing to deal 

 — two supply-curves. Let the two 

 branches in Fig. 7 represent such a 

 double supply-curve, the ordinate de- 

 noting price, and the abscissa the quan- .. 

 tity of product which is offered a' that Jf 

 price by a certain individual. Now, 

 the essential idea or leading property 

 of an individual supply-curve is that it 

 represents the quantity which the indi- 

 vidual will prefer to offer at any given 

 price. Hence the descending part of 

 the branches, dotted in the figure, can- 

 not form a genuine supply-curve. For 

 at any point on that part of the locus 

 it is evidently the interest of the indi- 

 vidual to increase his production, price 

 being constant. Stable equilibrium, 

 therefore, can exist only on the ascend- 

 ing, the unbroken branches. The thick 

 curve lines in the figure indicate the Q 

 locus oi greatest possible, as distinguished 

 from maximum, utility. Suppose that 

 at and above the price, correspond- 

 ing to the point q, it is the inter- 

 est of the producer to adopt the larger 

 scale of production. Up to that price 

 his industrial dispositions will be repre- 

 sented by the inner curve ; on reaching 

 that point he will jump from 17 to q' and 

 ascend along the outer curve. The locus 

 of greatest possible utility may be called 

 the genuine or effective supply-curve. 



A similarly shaped supply-curve may 

 exist for other producers. Suppose, now, 

 all these indivir'ual effective !-upply- 

 curves superpoied, and we have the ef- 

 fective supply-curve for the community, 



SS^, which continually trends outwards. 



This character is not annulled by the 

 existence of steps in the tract MN, 

 corresponding to the prices at which 



the leap of each individual occurs. A 



fortiori the demand-curve continually 



trends outwards like that in Fig. i (cp. 



Auspitz and Lieben). It should seem, 



therefore, that theoretically on the 



supposition of enlightened self-interest 



there is only one rate of exchange at 



which supply is just equal to demand. 



No doubt there is something to be said 



on the other side. Suppose the jump 



from q to q' , or from q' to q, involves 



a breach of habit, the inconvenience 



which the "economic man " will not 



neglect. A little attention will show 



that in this case the tract MN' of the 



collective-curve might break up in two 



separate branches. Moving from M 



upwards we should not be on the same 



locus as from N downwards. 



[k) One-sided Monopoly. — In Fig. 8 let the curve SS' re- 

 present the demand of the public for a monopolized article, the 

 abscissa denoting price, the ordinate quantity. Then, as Cournot 

 shows, it is the interest of the monopolist that the rectangle 



Oyrrx should be a maximum ('* Recherches," Art. 25), or 

 rather the greatest possible. The solution is not likely to be 

 indeterminate, except in the particular case where the demand- 

 curve is an equilateral hyperbola (contrast Sidgwick, " PoL 

 Econ.," book ii. chap. ii. §4). 



Fig. 9. 



(/) Two-sided Monopoly. — In Fig. 9 let Op and Oq re- 

 present the curves of constant satisfaction, or indifference-curves 

 [above, note [d) ; " Theorie der Preise," Appendix II. ; " Mathe- 

 matical Psychics," p. 21] drawn through O for two individuals 



