30 ECONOMIC PRINCIPLES

will have as a part of the aggregate supply. The value can
be taken as fixed beyond serious disturbance from efforts of
any one producer. In this the contrast with monopolised
supply, whether controlled by a single producer or by a
combination of producers, is marked. Under monopoly,
as will be seen, the quantity of supply is adjusted with
deliberate reference to the influence of variations of that
quantity on the value of the commodity. The same is more
or less true when individual producers control so large a
fraction of the aggregate supply that they can influence the
price by restricting their supply or expanding it.
Let us now consider our three classes of conditions of
supply in order. First comes the case of constant expenses
per unit of commodity. If the price obtained be equal to
these expenses (supposed to include hire of labour and
capital, cost of raw material, and wear and tear allowances
for buildings, machinery, etc., together with a profit sufficient
to make it worth while to undertake the risks of the trade),
and the total supply be such that its marginal utility falls to,
but not below, the level measured by the price, the demand
will be for the precise amount supplied, and, in the absence
of disturbing causes, such a condition might be permanent.
An equilibrium of supply and demand is established, at the
level of price, and with the amount of supply, indicated.
Now suppose the supply to be increased beyond the
equilibrium amount. The expenses per unit are equal to
the old price, but the marginal utility of the enlarged supply
is less than that of the old supply, and the demand-price is
the measure of marginal utility, and, for the enlarged amount,
is, therefore, less than the expenses per unit. The supply,
under these conditions, namely, that the price, above which
the whole supply cannot be disposed of, is below the
axpenses of production, is unremunerative, and cannot be
permanently maintained. Competition to share in the
advantages of such a market is not keen, and to withdraw
from the competition means to reduce the supply. A
reduction of supply may therefore be confidently anticipated,
that is to say, a movement towards the equilibrium conditions.
Next suppose the supply to be decreased below the