88 POLITICAL ECONOMY 



sellers. The knowledge that only 200 pictures of a given artist 

 exist helps us in no conceivable way to determine what their 

 value will be, nor whether that value will rise or fail. In a 

 given market, 011 a given day, the elements of the demand and 

 supply curves already exist in the minds of purchasers and 

 sellers, and both laws will apply, but neither law in the least 

 helps to determine the absolute height of either the supply or 

 the demand curve at any one time. 



In this case of a limited supply we are thrown back on the 

 truism that the price of the article depends on the desire felt for 

 that article relatively to others ; but it is worth while to observe 

 that the price is not fixed by the buyer, but by the holder. No 

 man, by saying ' I will not give more than 100 guineas for that 

 picture,' can make the price 100 guineas. The price at any 

 moment of a similar article cannot be lower than the lowest price 

 which any holder will accept. 



The popular adage that the worth of an article is what it 

 will fetch, supposes the holder forced to sell unreservedly ; com- 

 petition of buyers then fixes the price by the first law of demand 

 and supply. 



Leaving on one side the case of a limited supply as unap- 

 proachable, let us consider the case of an article, the manu- 

 facture of which continues, and of which the quantity made 

 depends ultimately on the price obtainable. It is not neces- 

 sary to suppose that the possible quantity produced should be 

 unlimited, but only that as the price obtainable increases, the 

 supply manufactured can be increased until the supply at a price 

 equals the demand at a price. 



In this category fall most manufactured goods. The average 

 demand curve may vary to an indeterminate extent, but the 

 average supply curve will be found in the long run to depend 

 simply on the cost of production : inasmuch as manufacturers 

 rarely desire the article they make for itself, but make it only 

 with the object of selling it. 



If in a given market, or series of markets, they find no de- 

 mand, or an insufficient demand, for their produce, at cost 

 price (including what they think a fair profit), they will cease 

 to produce, or produce only as much as the demand at that 

 price requires. While, if the demand equals or exceeds the 



