Mathematical Studv of Supply and Demand 93 



is +3 and B is +1, as in 1902, we would expect A to he — 1.1. In 

 like manner, in 1903, we would expect A to be +2.60 and in 1904* 

 + 1.35. 



The results expressed in a table are: 



The practical problem is to express hog prices in terms of hog 

 receipts and bank clearings. Practically the same method is used 

 with the 168 months from 1903 thru 1916, as with the four years 

 which have just been used for illustration. 



The standard deviations are 10.1 for hog receipts, 10.5 for hog 

 prices and 9.8 for bank clearings. The correlation coefficients 

 are +.39 between hog prices and bank clearings, +.26 between 

 hog receipts and bank clearings, and — A between hog receipts and 

 hog prices. 



Using the formula : 



A equals r B 



and allowing A to represent hog prices and B to represent bank 

 clearings, ^^■e get : 



10.5 



Hog prices equal .39 bank clearings, or 



9.8 

 Hog prices equal .417 bank clearings 



This formula is converted back into percentage departures 

 from secular trend modified seasonally, and finally into hog prices 

 as affected by bank clearings. The demand, or bank clearing, 

 price, of hogs as compared with the actual is shown in Chart VI. 

 In like manner we get : 



10.5 



Hog prices equal — .4 hog receipts, or 



10.1 

 Hog prices equal —.426 hog receipts 



This formula is converted back into percentage departures 

 from the secular trend modified seasonally, and finally into hog 

 prices as affected by hog receipts. The supply price of hogs as 

 compared with the actual is shown in Chart VH. 



Using tlie longer formula on page 89, we get : Hog prices 

 equal .56' bank clearings minus .56 hog receipts. Or converted 



