LAWS OF SUPPLY AND DEM AX D 87 



In the second case, the supply curve can be drawn, but the 

 demand at a price does not exist, and the demand curve cannot 

 be drawn. The buyer waits till the tenders are opened, choosing 

 the lowest. 



In the third case, the supply is fixed, being the whole stock 

 of the company : the supply curve becomes a simple point. The 

 demand is unknown until the applications for shares are opened 

 being all at one price, the demand curve then becomes a point 

 either above or below a supply point. If above, the shares are 

 allotted, but their price to the applicants is unaffected by the 

 excess of the demand over the supply. 



As soon as allotment takes place the market price can be 

 determined ; and in accordance with Law II., if the whole 

 demand at one price has been in excess of the supply at that 

 price, the demand curve at other points in the neighbourhood of 

 that at which the shares were allotted will probably be above 

 the supply curve, and the shares will reach a premium. Eigging 

 the market consists in the artificial production of false supply 

 and demand curves, with the object of deceiving the public as to 

 the market price. 



Even where the first and second laws apply, the price 

 selected by the first law, and the change of price resulting from 

 the second law, depend on the state of mind of th buyers and 

 sellers simply, and not on any material quantity, or on any law 

 hitherto stated. The demand curve and supply curve indicate 

 certain resolutions on the part of buyers and sellers ; and these 

 curves are therefore variable within certain limits, and do vary 

 with every cause which can affect the desire of men for the 

 article in question. The limits are set by the purchase fund to 

 the demand curve, by the whole supply to the supply curve ; 

 but at what price the limit for the supply curve, and at what 

 quantity and price the limit for the demand curve, shall be 

 touched, is wholly within the competence of the buyers and 

 sellers. 



The first and second laws of demand and supply therefore 

 afford little help, or no help, in determining what the price of 

 any object will be in the long run. If the supply be limited, as 

 in the case of pictures by an old master, the desire for the article 

 may nse or fall to any extent both on the part of buyers and 



