LAWS OF SUPPLY AND DEMAND 



81 



These effects, and combinations of these effects, may occur, 

 while the whole supply and purchase funds are both constant, 

 nevertheless at each moment the first law of demand and supply 

 holds good. 



Qrs 

 2000 

 1800 

 1600 

 1400 

 1200 

 1000 



800 



600 



400 



200 



10 



50 



SO 90 



Shillings. 



FIG. 4. Showing Changes in the Demand Curve. 



If the demand curve rise, as in the upper dotted line, the market price will be 55.1., and 



the quantity sold be 900 quarters. 

 If the demand curve fall, as in the lower dotted line, the price will fall to 45.*., and the 



quantity sold to 600 quarters. 

 As in Fig. 3, the whole supply, the price at which all would be sold or none sold, all 



bought or none bought, is left unaltered, as well as the supply curve. 

 In practice some or all of these elements would generally vary when the demand curve 



varies. 



Let us next consider what will happen if the whole supply or 

 whole purchase fund vary. 



PROP. 2. If the whole supply be increased, it will most fre- 

 quently, but not always, happen that the supply at a price will, 

 throughout the whole scale, be increased; prices will then fall, as 

 shown in Fig. 5. 



If the purchase fund be increased it will often happen that the 

 demand at a price icill rise throughout the ichole scale ; prices will 

 then rise, as shown in Fig. 6. 



These two statements, which, for convenience, may be spoken 

 of as the second law of demand and supply, are frequently con- 

 founded with the first law, from which they are wholly distinct. 

 They are not laws in a strict sense, but express a degree of 

 probability, varying immensely in different cases, and with 

 different materials. I will now apply these laws to some of the 

 current controversies. 



VOL. II. tr 



