LAWS OF SUPPLY AND DEMAND 79 



If every man were openly to write down beforehand exactly 

 what he would sell or buy at each price, the market price 

 might be computed immediately, and the transactions be then 

 and there closed. 



F 



Qrs. 

 1000 



800 

 600 

 400 

 200 

 



\?<< WioT* supply reinaininrL trfifn sal ex rndtd . 



-^f*- **** 9 "-r^s" ^= 



9*_ > f ^el*^> 



*** ^ 



>?'-. 



10 20 30 40 50 60 70 80 



F[G. 2. Demand and Supply Carves after completion of sales indicated in 

 Fig. 1, without change of market price. 



Whole supply at any price, 600 quarters. 



Price at which whole supply would be sold, 90*. 



Price at which whole supply would be bought, 20*. 



Market price, 50*. 



Price below which no sale would take place, 50s. 



Price above which no sale can take place, 50*. 



Quantity which will be sold nil. 



The actual price at which each quarter is sold will be a mere 

 tentative approximation to the theoretical price. Bargainers all 

 day long will be watching the market, to ascertain whether a 

 given price is above or below that at which the quantity to be 

 bought and sold will be equal. 



But, in practice, men's minds do not remain constant for 

 five minutes together, and we have found that only one point 

 in the supply curve, viz. the highest, is independent of men's 

 minds. The supply curve can never rise above the whole sup- 



.' but under this height it may vary almost indefinitely. 



Similarly, the demand curve has a limit, which in this case 

 is a limit at each price. The funds available for purchase at any 

 price are limited, and this, which may be called the purchase 

 fund, at each price limits the possible demand ; but below this 

 continuous limit the demand curve may in its turn vary in- 

 definitely ; and thus, while the whole supply in the market may 

 be constant, and the funds available to support demand may be 



1 Except in those cases where men sell what they have not got, trusting 

 that before the time for delivery they may be able to secure a supply. 



