SUPPLY AND VALUE 57

less profit than is realised at the equilibrium, and hence
operates to restore that rate of supply which corresponds to
equilibrium with demand. Similar statements apply to
reduction of the scale of supply below the equilibrium
amount.
We need, now, to consider whether there is reason to
expect that, for amounts of supply greater than correspond
to equilibrium, the supply-price will be above or below the
corresponding demand-price. The consideration that the
indefinite increase of supply cannot possibly be accompanied
by an indefinite reduction of supply-price, while with a
greatly enlarged supply marginal utility does tend to vanish,
leads to the conclusion that there must be scales of supply
for which the supply-price is greater than the demand-price.
If there be any scale of supply for which the supply-price
does not exceed the demand-price, there must exist an
equilibrium of demand and supply of the ordinary stable type.
The term “ supply-price ” here used means a price adequate
to induce producers to prepare, and offer for exchange, a
supply corresponding to that price. It must, therefore, be a
price sufficient to cover cost of production, and, if competition
exist and be vigorous, the excess over cost of production will
be not more than sufficient to afford such profits as competitors
 need to secure in order to continue in competition.
Some writers use the phrase “necessary profits” to apply
to the level to which competition tends to reduce profits, and
such “necessary” profits are often taken to be included in
cost of production. Read in that sense, the supply-price
would become a measure of cost of production.
It has already been pointed out that cost of production
comes to exert an influence on value because it expresses
a condition which must be fulfilled (Ze. the cost of production
must be worth while incurring) if supply is to be maintained.
But the condition may be more or less comprehensive
according as there is contemplated a more or less complete
adjustment of productive apparatus to the purpose of affording
 the supply. A temporary need for increase of supply,
or a temporary falling off in demand, cannot be met by
corresponding adjustments of all parts of the requisites of