190 LES PRINCIPES MATHEMATIQtJES DE 



the imaginary to the real. Setting out then vrith the case of an 

 absolute monopoly, where the production of a commodity is entirely 

 in the hands of a single person, the price will be determined by the 

 principle that the net produce of the commodity shall be a maximum ; 

 by the net produce meaning the revenue obtained by the sale, less 

 the cost of production. If the cost of production increase, the price 

 will also be increased, though not necessarily to the same extent, and 

 if this increase of cost be not supported by the producer, but by the 

 consumers or by the agents who convey to the consumers and are re- 

 imbursed by them, the commodity will always be enhanced to the 

 consumer, and the net revenue of the producer v/ill be diminished, 

 yet the price paid to the producer may rise or fall according to the 

 varying circumstances of the case. An important distinction here 

 developes itself according as an increase of production is attended by 

 an increase or decrease of the cost of production. In the majority 

 of cases of manufactures the latter state will prevail ; for, the larger 

 the establishment, the less in proportion are its expenses. In the 

 products of agriculture and in the working of mines, the contrary may 

 often happen, and even in cases which at first sight have something 

 parodoxical about them ; for instance, it is said that the Times news- 

 paper has reached such a circulation, that every extension of it dimin- 

 ishes the profits of the proprietors, the actual cost of production of 

 each copy of the paper being less than the price charged for it, and 

 the space devoted to the advertisements, from which the profits are de- 

 rived, being filled to its utmost extent. Another curious class of cases 

 falls between the above two,namely, those where the cost of production 

 is unaffected, either by the increase or decrease of the production, 

 and the price is consequently the same as if the commodity were pro- 

 duced without cost. For example, the expenses of a bridge which is 

 supported by toll will be sensibly the same whether the passers over 

 are few or many, and of a theatrical performance, whether the boxes 

 are full or empty. 



In all this investigation it has been supposed that there is nothing 

 to prevent the producer from producing the amount which is required 

 to give him his maximum revenue, nor on the other hand from lower- 

 ing his price to that required for the same maximum. If otherwise, a 

 totally different calculation is called for, which we need not here enter 

 into. 



Closely connected with the foregoing, is the theory of taxation, 

 which may be considered as an artificial increase of the cost of pro- 

 duction. We need only consider two sorts of taxes, the direct and 



