APPENDIX

303

drawn, the price PN and the supply ON correspond to an
equilibrium of demand and supply (¢/. pp. 50, 51). If pgz and
trm be ordinates near to PN, cutting the demand curve at p
and 7» respectively, and the supply curve at ¢ and ¢#, the
argument of p. 50 may be presented briefly as follows. If
the supply be Oz,
less than ON, the
supply price for
that amount is gz,
the demand price
for that amount is
pn. Thus the demand
 price is
greater than the
supply price, and
supply tends to
expand, If the
supply be Om,
greater than ON,
the supply price
for that amount is
tm, and the demand
 price for
that amount is #2,
which is less than
tm. Thus the supply of any amount greater than ON is
unprofitable, and supply tends to decrease. With a supply
ON, the supply price is equal to the demand price, and there
is no stimulus either to increase or to decrease the scale of
production.
The above argument will hold whenever the supply
curve is below the demand curve to the left of P, its
intersection with that curve, and above it to the right of
that point. It is argued on pp. 56 and 57 that such a point
of intersection will always occur when a supply of a commodity
 is economically possible. The consideration of an
intersection of the opposite kind, referred to at the foot of
p. 56, may be left as an exercise to the reader.
The intersection of the two curves may be presented in
algebraic form by combining the two equations (i) and (ii).
If demand price and supply price be equal, we must have
S@)=p(x)
an equation from which z, the appropriate scale of supply,