But even there the policy is apt to be wrenched from its proper uses, to the enrichment of particular interests: for those industries which can send the greatest number of votes to the poll, are those which are already on so large a scale, that a further increase would bring very few new economies. The composite demand for a thing, resulting from its being used for several different purposes, and the composite supply of a thing, that has several sources of production, present no great difficulty; for the several amounts demanded for the different purposes, or supplied from different sources, can be added together, on the same plan as was adopted in Book III, for combining the demands of the rich, the middle classes and the poor for the same commodity. The theory of monopolies 15. 33 (a reproduction of 31) to represent roughly the leading features of the problem. The difficulties of the problem depend chiefly on variations in the area of space, and the period of time over which the market in question extends; the influence of time being more fundamental than that of space. This position is confirmed by the study of the theory of monopolies. 26 it is less. (5), If however the commodity obeys the law of diminishing return; a tax by raising its price, and diminishing its consumption, will lower its expenses of production other than the tax: and the result will be to raise the supply price by something less than the full amount of the tax. Though not of great practical importance, the case of multiple positions of (stable) equilibrium offers a good illustration of the error involved in the doctrine of maximum satisfaction when stated as a universal truth. Again, it is commonly argued that an equal ad valorem tax levied on all economic commodities (material and immaterial). But the bounty paid is Ss on an amount SA, which is represented by the rectangle sSAL: and this exceeds the gain of consumers' surplus by the area aLA. 6. If we take account of the circumstances of composite and joint supply and demand discussed in chapter VI, we have suggested to us an almost endless variety of problems which can be worked out by the methods adopted in these two chapters. For when changes of supply price and amount produced are regarded as dependent exclusively on one another without any reference to gradual growth, it appears reasonable to argue that the marginal supply price for each individual producer is the addition to his aggregate expenses of production made by producing his last element; that this marginal price is likely in many cases to be diminished by an increase in his output much more than the demand price in the general market would be by the same cause. Even if the tax is heavy and the industry shrinks, many of the economies gained will be in part at least preserved; as is explained above in Appendix H. In consequence ss' ought properly not to have the same shape as SS', and the distance aE ought to be less than AT. But occasionally it is stated, and very often it is implied, that a position of equilibrium of demand and supply is one of maximum aggregate satisfaction in the full sense of the term: that is, that an increase of production beyond the equilibrium level would directly (i.e. In 1990, Marshall rose to world prominence after authoring his book, Principles of Economics, which usurped other works as the principal economics textbook. Advocates of Protection in countries which export raw produce have made use of arguments tending in the same direction as those given in this Chapter; and similar arguments are now used, especially in America (as for instance by Mr H. C. Adams), in support of the active participation of the State in industries which conform to the law of increasing return. In the case then of commodities with regard to which the law of increasing return acts at all sharply, or in other words, for which the normal supply price diminishes rapidly as the amount produced increases, the direct expense of a bounty sufficient to call forth a greatly increased supply at a much lower price, would be much less than the consequent increase of consumers' surplus. ' to be his seminal work tax is a small one, it may merely retard this and... Is most inelastic, that is, they w.ill be the greater the fall of price in.. Retard this growth and not cause a falling off in demand and supply in relation to the relation the... A in fig for it lessens the demand or supply prices involves of course rise. 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