THE PRICE OP WHEAT 137 



probably approximates most closely to the nature of a 

 world market. 



Then, again, markets vary with regard to the period 

 of time which is allowed to the forces of demand and 

 supply to bring themselves into equilibrium with each 

 other as well as with regard to the area over which 

 they extend. This element of time is really of more 

 importance than that of space; for the nature of the 

 equilibrium itself, and that of the causes by which it 

 is determined, depend on the length of the period over 

 which the market is taken to extend. Three groups are 

 distinguishable here also, according to the length of this 

 period. If the period is short the supply is limited to 

 the stores which happen to be at hand, as in the case of 

 perishable goods. If the period is longer, then supply 

 will be influenced, more or less, by the cost of producing 

 the commodity, as in the case of raw produce where 

 machinery is not complex, for example, wheat in India. 

 Lastly, if the period is very long the cost of production 

 itself will be influenced by the cost of producing 

 the labour and material required for producing the 

 commodity, as in the case of goods where much machinery 

 is used, for example, the precious metals. 



These three classes merge into one another by imper- 

 ceptible degrees, and we may class wheat as on the 

 border between the second and third classes. 



Having now fully determined the nature of the wheat 

 market we are ready to study the factors which operate 

 through this market to determine the price of wheat. 



3. Supply and Demand. 



The market price of wheat is the result of the 

 tendency of supply and demand to reach a point of 

 equilibrium. But modern factors operating to produce 

 this equilibrium are so many and complex that the great 

 underlying principle of the equilibrium of supply and 



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