18

ECONOMIC PRINCIPLES

ducing effort instead of with the expense incurred in securing
the control of that effort, would be referred to as manifesting
respectively constant, increasing, and decreasing returns, It
may be noted that, though, for different scales of output of
the same commodity, the industry may not always be found
in the same one of the three classes here distinguished, the
actual situation must be included in one or other of the three
variations of the relation of expenses to output.
If we are enquiring merely what conditions will lead to
a supply at a given cost equal to the demand at a price
adequate, but no more than adequate, to cover that cost, it
may appear that we are not concerned with the differences
between constant, decreasing, and increasing costs. That
might be a tenable view if the actual conditions encountered
in practice were not such as to make the rate of supply vary
from its average amount from causes which may be described
as accidental, as well as from the deliberate actions of producers.
 Will such accidental variations lead to permanent
change in the relation of supply to demand or not? This is
an enquiry of the greatest importance. A ball resting on a
flat surface may be rolled along and stopped at any point,
displaying no tendency to return to its original situation, If
it be placed in a bowl, and rolled away from the bottom of
the bowl, it will roll back again, while if it be placed on the
top of an inverted bowl, a very slight displacement from its
position of rest may send it rolling still further from that
position. The shape of the surface on which the ball rests,
whether flat, or like the bottom of a valley, or the crest of a
ridge, is of importance if the ball is subject to disturbance,
for it determines whether large changes may result from
trivial disturbances or not. Similarly with regard to the
balance of the forces which stimulate to an increase and
those stimulating to a decrease of the scale of supply. It is
not sufficient to direct attention to the point of equilibrium,
but we must also consider the consequences of the disturbances
 to which such a condition of equilibrium is subject.
The relation of costs to scale of production may be conceived
 of, either from the point of view of an individual
producing establishment, or from that of the industry,