73. #Laws of Supply and Demand.# In the next place, we must try to understand how the values of things are governed, and made to change from time to time. The principal laws which govern values are called #the laws of supply and demand#, and they are very important indeed. #Supply# means the quantity of any goods which people are willing to give in exchange at a certain value, and #demand# means similarly the quantity of goods which people are willing to take in exchange; but, before a person can judge how much he wishes to buy of a particular kind of goods, he must know its price, that is, its proportion in exchange for money. If bread, instead of being threepence per pound, becomes fourpence, a poor person would perhaps decide to take less bread, and to buy more potatoes. If beef, instead of being ninepence, should rise to a shilling, or fourteenpence a pound, some people would refuse to buy it altogether, and others would buy less than before. The supply of things varies similarly; if the price of meat rises high, farmers who own cattle bring them to market, in order to get a good profit by selling them; if the price falls low, they keep their cattle to sell at another time. #The Laws of Supply and Demand# may be thus stated: a rise of price tends to produce a greater supply and a less demand; a fall of price tends to produce a less supply and a greater demand. Conversely, an increase of supply or a decrease of demand tends to lower price, and a decrease of supply or an increase of demand to raise price. These laws are so important that I will state them over again, in the form of a table:-- |-----------|------------|-------------| | #Price.# | #Supply.# | #Demand.# | |-----------|------------|-------------| | Higher. | Greater. | Less. | |-----------|------------|-------------| | Lower. | Less. | Greater. | |-----------|------------|-------------|