o make vivid to our minds the fundamental
distinction between a change in the _conditions_ of demand, arising
from new tastes, enhanced purchasing power, etc.; and a mere change in
the amount purchased resulting from an alteration in the price which
the sellers ask. Words, as this necessarily cumbrous sentence shows,
are a clumsy instrument for the expression of abstract relations; it
is not very easy to see which words in a sentence are the significant,
commanding ones, and which are performing, as it were, ordinary
routine duties. A diagram is not exposed to similar ambiguities of
emphasis.

The particular distinction, to which attention has been called, is
important. The reader who has grasped it clearly will be able to
perceive many instances of the confusion arising out of its neglect in
the ordinary discussions of economic questions which take place in the
press and on the platform. It is not uncommon, for instance, for an
argument to run something like this: "The effect of a tax on this
commodity might seem at first sight to be an advance in price. But an
advance in price will diminish the demand; and a reduced demand will
send the price down again. It is not certain, therefore, after all,
that the tax will really raise the price." A glance at the diagram
will keep us out of such a bog of sophistry and muddle. For if we
suppose the amount of the tax per unit of the commodity to be
represented by S_s_, the curve _ss'_ (drawn, as it is, roughly
parallel to SS') will represent the new conditions of supply after the
tax has been imposed. The new position of equilibrium will be given by
the point P', where _ss'_ cuts DD', the demand curve. Now P' lies to
the left of P the old point of equilibrium; hence, since DD' _must_
slope downwards from left to right, it is clear that, if, as it is
fair here to assume, the _conditions_ of demand have remained
unaltered, the new price P'M', must be greater than the old.

Sec.4. _Reactions of Changes in Demand and Supply on Price_. Having now
made clear the meaning that must be attached to the terms, let us
consider the question which naturally arises, whether we can lay down
any general propositions or laws as to the effect upon price, of an
increase or decrease in demand or supply. Another glance at the
diagram suggests that we can. An increase in demand is represented in
Fig. 2 by a movement from DD' to _dd'_, which cuts the supply curve,
SS', at _p_, to the right of P. Sinc