26 FRUIT HARVESTING, STORING, MARKETING 



fundamental problem. Its real significance will appear 

 more clearly in the course of the following study of 

 demand, supply, and price. 



Two entirely independent conditions influence the 

 price of any commodity. The first is cost of produc- 

 tion. In a general way, as every one knows, the price 

 of an article must be determined by what it costs to 

 make it. It costs more to produce a barrel of apples 

 than to produce a quart of strawberries, and the 

 apples necessarily sell for a correspondingly higher 

 price. 



But, aside from the cost of production, the rela- 

 tion of supply and demand determine the price. 

 Prices increase with demand and diminish with supply. 

 The mathematician would say that demand divided by 

 supply gives price; or he would write it in the form of 



an equation, thus : 



p_ d 



s 



or he might say that price is the expression of the 

 ratio between demand and supply. Whatever he 

 might say it would be no clearer than the practical 

 fact that when peaches are plenty the price goes down, 

 and when they are scarce it goes up. 



Now as the supply increases and price decreases, a 

 point is reached presently where the market price 

 equals cost of production. The margin of profit has 

 been wiped out, and that market may properly be 

 said to be over-supplied with the commodity in ques- 

 tion. Sometimes fruit continues to be offered at prices 

 below the cost of production, but such offerings can 

 not long be continued. The cost of production thus 



