LAWS OF SUPPLY AND DEMAND 85 



this case the demand curve becomes horizontal near the market 

 price ; and as the supply curve is also horizontal, the market 

 price is indeterminate. This case is not peculiar to any form of 

 bargain, but represents an unusual state of rnind. It is shown 

 in Fig. 9. 



Where only a small number of transactions take place, there 

 can, in the above sense, be no theoretical market price ; thus, 

 with one buyer and seller of one thing, the demand and supply 

 curve become two straight lines, ending abruptly, as in Fig. 10. 



Fairy 



Horses 



Demand,. 

 Sunshine 



Fig. 10. 



10 20 30 40 50 60 70 pounds sterling. 



FIG. 10. Sales of one article by one man to au jther. 



A owns the horse Sunshine ; he will sell it at any price above 501. B will buy that horse 



at any price below 4U/. 



The demand and supply curves are two straight lines which do not overlap. 

 C owns the mare Fairy, which he will sell at any price above 4Uf. D will buy the mare 



Fair}- at any price below 50/. 

 The demand and supply lines overlap, and the price is indeterminate, depending on the 



relative skill of the two persons in bargaining. 



If the supply line overlaps the demand line, the sale will 

 take place, and not otherwise ; but the price is indeterminate. 

 This is true whether the sale be by private bargain, by Dutch 

 or by English auction. 



Fig. 11 shows Mr. Thornton's case of three horses, or any 

 less number, for sale at 50/. each, and one purchaser at 50/. 

 The curves indicate plainly enough the fact that the sale of one 

 horse is possible. The quantity sold is not equal to the 

 quantity bought, but it is more nearly equal than at any other 

 price. 



We are now able to see precisely in what sense and in what 

 cases the first law of demand and supply may be said to fix 

 prices in a market. This law only selects one among many 

 possible prices already determined in the minds of sellers and 



