iable influence; and
we can, therefore, feel reasonably sure that over a short period an
increase in demand will raise the price. But we cannot be sure what
the ultimate effect will be. A similar alteration in the condition of
demand is less likely to result from an increase or decrease in
supply; but it may conceivably occur. We must, therefore, be careful
to qualify any general propositions which we lay down in this
connection, by explicit reference to a short period of time. We can
add the following to our body of laws:--

LAW IV. An increase in demand, or a decrease in supply will tend to
raise the price for a short period at least. Conversely a decrease
in demand, or an increase in supply will tend to lower the price
for a short period at least.

This law, like the others, applies to commodities, services, capital,
to anything which can be said, literally, or by analogy, to have a
price. "A short period" is, however, a vague expression and, since
precision is the hallmark of an important law, we must accord to this
one a status inferior to that which the preceding three can rightly
claim.

Sec.5. _Some paradoxical reactions of price changes on supply_. Let us
turn, though, once more to these earlier laws, and with a heightened
critical sense let us submit them to the test of the whole gamut of
our experience, and see if in any of them we can find the smallest
flaw. The first of them will pass through the ordeal--let each reader
prove it for himself--unscathed. The second will emerge with a few
hairs, as it were, singed. It tells us, for instance, that a rise in
price will tend to augment the supply. Now there are some things the
supply of which cannot possibly be augmented; these are the capital
resources of nature, of which land is the most important for our
present purpose. Land is bought and sold, it commands a price. In a
certain sense, it may be said to be possible to increase the supply of
land, in response to a rise in price, by drainage and reclamation
schemes; and it will certainly happen that a rise in the price which
land can command for any particular purpose will increase the amount
which is devoted to that purpose. But, speaking broadly, the supply
of land available for purposes of every kind is a fixed unvarying
factor, with an inertia which the cajolery of price-changes is
powerless to disturb. This is a most important fact, and it gives rise
to some peculiar features of the price a