682 



REPORT— 1889. 



NOTES. 



(«) Simple Exchange. — The simplest case of Exchange is where there are two 

 large groui^s of uncombined individuals dealing respectively in two commodities, e.g., 

 corn and money. To represent the play of Demand and Supply, let any abscissa. 

 Ox in Fig. 1, represent a certain price, and let the quantity of commodity demanded 

 at that price be xp. The locus of p may be called the Demand-curve. Similarly, wq 

 represents the quantity offered at any price. Ox ; and the locus of q i.s called the 

 Supply-curve. The price Oa, at which the demand i.s just equalled by the supply, is 

 determined by the intersection of these curves. This is Cournot's construction. The 

 converse construction, in which the abscissa stands for quantity of commodity, the 

 ordinate for price, is employed by Mr. Wicksteed in his excellent ' Alphabet of Econo- 

 mic Science.' 



Fig. 1. 



The diagrammatic representation which most closely corresponds to Jevons's for- 

 mulae is that which the present writer, after Professor Marshall, and Messrs. Auspitz 

 and Lieben, independently, have adopted. In this construction the two co-ordinates 

 respectively and symmetrically represent the quantities of the two commodities 

 exchanged, the qtdd and the pro quo. For instance. Fig. 2 may represent the state 

 of Supply and Demand in the international market between Germany and England. 

 The curve OE denotes that in exchange for any amount of 'linen,' 0//, England is 

 prepared to supply the quantity of ' cloth ' yj) { = Ox) ; or, in other words, that in ex- 

 change for the quantity Oa- of cloth England demands xj) ( = Oy) of linen. The 

 curve OG is similarly related to Germany's supply and demand. The position of equi- 

 librium is determined by the intersection of these curves. 



(fi) Variations in Supply.— Suppose, as MiU supposes ('Pol. Econ.,' Book iii.,ch. 

 18, § 5), that there has occurred an improvement in the art of producing Germany's 



