621 
of Edinburgh , Session 1871 — 72 . 
tainly not, in most cases, be determined by experiment, but 
statistics gathered through a few years would show approximately 
the steepness of each curve near the market price, and this is the 
most important information. 
A steep supply curve and a horizontal demand curve indicate 
that the buyers reap the chief benefit of the trade. The sellers, if 
producers, may, however, be making important profits as capitalists 
and labourers. 
A steep demand curve and a level supply curve indicate that the 
suppliers are chiefly benefited by the trade ; the community or 
body which is most ready to abandon the trade if the price in- 
creases a little, benefits least by the trade. 
When the traders are producers and consumers, the benefits 
estimated in this way as due to the trade are not the only benefits 
reaped by the community from the manufacture. 
In this case, what is termed the supply curve depends on the 
cost of production of the article, including that interest on capital 
and that remuneration for skilled superintendence which is neces- 
sary to induce the producer to employ his capital and skill in that 
way. The cost of production increases generally with the quantity 
of the article produced, otherwise the supply curve would be a straight 
vertical line ; but as a matter of fact, to produce an increase of 
production a rise of price is necessary, indicating that only a few 
men with little capital are content with a small rate of interest and 
small remuneration for their skill, but that to induce many men 
and much capital to be employed in the particular manufacture, a 
large rate of interest and considerable remuneration are required, 
hence the supply curve will be such as shown in fig. 2, where the 
price OP is that price or cost of production which is just sufficient 
to tempt a few producers to produce a little of the article. 
Then if OP' is the actual cost out of pocket required to produce 
a small quantity of an article, and if OP is the lowest cost at 
which any manufacturer can afford to produce it, the area P'D'DM 
represents the whole profit to the producing capitalist when the 
price is OM. The line D'P' is not necessarily parallel to DP,' 
nor vertical, the bare cost of production of the article generally in- 
creases as the quantity increases; and in that case D'P' is not verti- 
cal. Again, the rate of interest required to tempt additional capital 
4 o 
VOL. VII. 
