430 AGRICULTURAL ECONOMICS 



affecting the seasonal range, such as a crop report, there may be con- 

 siderable fluctuations in the course of a day. These oscillations give 

 the opportunity to the astute bargainer. Some buyers, not cool- 

 headed enough to bide their time, will pay more than the equilibrium 

 price. On the other hand, some sellers, unduly anxious lest their 

 supplies be left on their hands, will sell at less. The shrewd and 

 unexcitable person, carefully watching the course of dealings, may 

 buy at one price from the overeager sellers and sell on the same day 

 at a profit to overeager buyers. 



What is true of cotton holds of other agricultural commodities, 

 whose supply also is settled by the crops of each season: of wheat, 

 corn, and other grains, of hay, flax and hemp, hops, sugar, tea, coffee. 

 There is always a seasonal price, around which fluctuate the market 

 prices for shorter periods. Virtually this holds of other commodities 

 also. It is true that agricultural commodities show more unmistak- 

 ably than most others the temporary fixation of supply. The supply 

 of manufactured commodities changes more smoothly and continu- 

 ously. The amounts offered in the market can often be increased 

 and diminished without waiting for nature's processes of growth. 

 But even here there are important limitations. For any given period 

 of moderate length a half-year or a year there is something like a 

 fixed supply. 



VALUE AND COST OF PRODUCTION 



I. In the preceding discussion of demand and supply and of 

 market value, an absolutely fixed supply was assumed at the outset. 

 Let now the other extreme be assumed, a supply absolutely flexible. 

 Suppose a commodity produced, under the simplest conditions, by a 

 large number of persons. Suppose that all these persons are com- 

 peting with each other; that any one of them can easily engage in 

 producing the commodity, and as easily withdraw from producing it. 

 Suppose all to be carrying on operations under the same conditions, 

 no one of them producing more cheaply than another. Such a com- 

 modity would be brought to market under conditions of constant cost, 

 and would be sold at a price conforming to that cost. At any moment 

 its value would indeed be determined directly by its quantity that 

 is, by marginal utility. But if its value, so determined, were greater 

 than its cost, more persons would be led to engage in its production, 

 supply would increase, and value would fall. If its value at any time 

 were less than its cost, some persons would withdraw from its pro- 

 duction, supply would decrease, and value would rise. The greater 



