e the flexibility of demand is also high. In other words, it may
pay the Trust better to make very large sales at a low price when the
expenses of production are low, than to sell a smaller quantity at a
higher price and with a higher expense of production. In this case the
consumer may get a part of the advantage of large-scale production
along with the saving of expense of competition. There is, however, no
guarantee to society that low prices will be fixed. In the vast
majority of cases it will probably pay the Trust better to limit
production and sell at higher prices.

In the illustration above we have assumed that a monopoly was starting
_de novo_. Where a Trust is formed, as is commonly the case, by an
amalgamation of existing capitals largely embodied in plant and
machinery of production, it will probably not pay to limit production
to a very small output, even though the largest proportionate margin
of profit might seem to stand there. For the interest upon the closed
mills and other idle capital should be reckoned among the expenses of
production for the purposes of determining the profitable price. Thus
where large means of production are owned by a monopoly it will seldom
pay to sell a very small supply at a very high price.

So far we have treated of absolute monopolies, eliminating all
consideration of competition. We have found that the supply and the
price of an article of absolute monopoly is determined by the relation
between expenses of production and flexibility of demand. Although a
new invention or a wide expansion of market may alter so considerably
the expenses of production of the several quantities of supply as to
materially affect monopoly-supply and prices, it is the latter
influence, that of flexibility of demand, that directly in each
specific case determines whether a Trust's prices shall be high or
low. When we find the Standard Oil Trust maintaining a low level of
prices, or the Western Union Telegraph Company charging low rates, we
shall find the explanation in the character of the public demand for
oil and telegraphic messages.

Sec. 7. A number of considerations relating to "demand" limit the
economic power of monopolies to charge high prices.

A monopoly price, as we have seen, exactly measures the marginal
utility of the supply, as indicated by the quantity of money which the
purchaser of the last increment of supply is just willing to pay for
it. When this marginal utility sink