e:--

|-----------|------------|-------------|
| #Price.# | #Supply.# | #Demand.# |
|-----------|------------|-------------|
| Higher. | Greater. | Less. |
|-----------|------------|-------------|
| Lower. | Less. | Greater. |
|-----------|------------|-------------|

We can now understand how the price of any kind of goods is decided. The
price must be such that the quantity demanded at any time is equal to
the quantity supplied. If those who want goods at a certain price,
cannot get them, they will have to offer a higher price, so that they
may induce other people to sell. The higher the price the greater the
supply, as we have seen; moreover, if some people in a market are
offering a higher price, it soon becomes known to other dealers. When a
farmer's wife carries a basket of butter to sell at the Butter Cross in
the neighbouring market town, she soon learns whether the supply is
greater or less than usual. If the purchasers are few and slow in
buying, she begins to fear that she may have to carry her butter back
unsold, and go without the crockery and calico and other things which
she intended to buy with the money. Then she begins to ask a penny or
twopence a pound less, and the other sellers of butter are obliged to
lower their prices also, since no one would buy butter from one woman at
1s. 6d., if he could get it as good from the next person at 1s. 4d. But,
if few people bring butter to market, or if there are many purchasers
with money in their pockets, the scene is quite changed. Those who have
brought butter, find that they will have no difficulty in selling all
they have; it is the purchasers who now become anxious to buy before all
is gone, and their eagerness soon shows the sellers that they may ask
higher prices. It is by this #higgling of the market#, by sellers asking
the highest price they think they can get, and buyers trying to buy at
the lowest price which they think will be taken--that the market price
of any commodity is settled.

#The market price will be such that the demand at that price will equal
the supply at that price.# The quantity of butter or any other commodity
that is sold must equal what is bought, because it is not sold until it
is bought; but the price will settle itself accordingly.

#74. How Value depends upon Labour.# We now come to the great question
whether value is produced by labour, or how it is connected with labour.
Som