140 WHEAT PRODUCTION IN NEW ZEALAND 
day in any of the great world markets. Temporary 
disturbances are due for the most part to factors oper- 
ating from the supply side, for the element of risk in the 
production of wheat is great, due chiefly to the large part 
which climatic conditions play in the yield and in a less 
degree to transportation difficulties. But the fact that 
the world supply of wheat comes from all quarters of 
the globe tends to prevent acute scarcity of the general 
supply, a temporary diminution in production in one 
area being counteracted by abundance from some other. 
Nevertheless, it must be observed that each of these 
factors will have a temporary effect on price. 
On the demand side factors do not exert such an 
immediate influence. The condition that wheat is the 
staple food in the nations of the highest civilisation and 
of the greatest economic strength tends to keep the 
demand for wheat firm. In other words, the demand for 
wheat is characterised by its inelasticity. 
This treatment so far offers an apparent contradiction 
to the principle, elaborated in most treatises on eco- 
nomics, that demand plays a predominating part in the 
determination of market price, while in normal price 
it is chiefly factors on the supply side which exert a 
decisive influence.* On the whole the contradiction is 
only apparent. The activity of buyers varies from day 
to day, and it is this activity which settles price 
from day to day. How then, as was stated above, can 
temporary fluctuations be due for the most part to 
factors operating from the supply side? 
The demand for the products of wheat is so constant 
that buyers would make their purchases with a high 
degree of regularity were it not for temporary dis- 
turbances in supply. The activity of buyers on any 
one day is stimulated by news of the failure of certain 
*Marshall’s ‘‘ Principles of Hconomics.’’ Pages 372-8. 
