CHAPTER IV

SUPPLY AND VALUE

H AVING examined the general nature of the conditions
of demand for any particular commodity, we must
now give some attention to the conditions which affect the
supply. When the supply of a commodity is limited, and
the commodity thus in limited supply possesses utility, the
grade of utility which, with all higher grades, secures satisfaction,
 is less or more important according as the supply is
less or more limited. Whatever influences the degree of
limitation of supply must necessarily influence the amount
of the marginal utility, that is to say, must influence the
exchange value of the commodity.
Supply may be limited for three reasons at least. The
actual amount of the commodity in existence may be beyond
the influence of all human efforts, an amount to be accepted
as a fact. The amount existing may be capable of expansion,
 but the supplies may be under the control of
persons who find a profit in imposing a limitation on the
amount made available for consumers. But though neither
of these limitations exist, the increase of supply may involve
considerable expenditure of effort, and in that case the supply
will only be enlarged if it be worth while to undertake the
necessary expenses involved in procuring an increase of
supply.
As to the first case, the conditions are simple. A supply
definitely limited in quantity, and in regard to which there
is no need to consider the possibility of variation in amount
in response to price-changes. A given amount seeking
purchasers, the whole of which is to be sold, and no addition
to which can be procured however much it may be desired.
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