Since improvements in method so constantly lessen the normal value of products, Mr. Carey made the effort to measure value by "cost of reproduction," meaning, I suppose, that any article produced at any time and place is likely to bring in any market a price equal to the cost of similar articles produced under the most improved methods anywhere used in the present. This, of course, does not apply to articles not desired in the present, because deteriorated or out of fashion or less useful than some new device for a similar use, but only to those articles of full utility in having all the qualities needed to meet the desire of purchasers. Even a diamond like the famous "Kohinoor" would have its almost priceless value reduced to the cost of securing similar jewels equally desirable if a process of crystallizing carbon were suddenly discovered. It is easy to see, then, that cost measures value only so far as it is directly connected with the available supply in any market. Under ordinary circumstances the supply cannot be increased unless the cost is met, but the rule is modified by any peculiarity of season, or conditions of trade, or production by cheaper methods or cheaper labor, or by the changing wants of a community. The application of all these influences may be studied under the so-called law of supply and demand.
_Supply and demand; markets._--The law of supply and demand is only a statement of the general fact that market value tends to increase with increase of demand and to decrease as the supply to meet the demand increases. It must be understood that a market means a particular spot where buyers and sellers of any article of commerce meet at a particular time. The supply is the amount offered for sale at a given price. The demand is the amount buyers will purchase at the same price.
Thus, if on a certain day sellers offer in Chicago 10,000 hogs, with a willingness to take $5 per cwt., they represent the supply. If on the same day in the same place buyers are willing to take 10,000 hogs at $5 per cwt., $5 will be the market price, and the supply and demand will be equal. If, however, only 5,000 hogs would be bought at $5 per cwt., 5,000 hogs will be without buyers, and their owners will seek, by lowering the price, to find buyers at $4.50 per cwt., if necessary. Since all the sellers will feel the same pressure, the tendency of market value will immediately be downward. Buyers willing to pay $5 per cwt., finding many sellers, will expect a reduction in price, and the price will certainly go down until the hogs purchased equal the entire supply. And that will not be until the buyers are stimulated by reduction of price, so that as many hogs are wanted as there are for sale. If that point is reached at a price of $4.50 per cwt., the market value is found there. The limit of time within which this reduction takes place will depend upon the ability and willingness of sellers to wait. If the product offered is perishable, or costly in keeping on the market, the reduction will be speedy. Otherwise it may be held indefinitely with the hope of compelling buyers to come to the higher prices, in which case it is practically taken out of the market. Only those commodities are practically in the market which are held for sale at the market price. Only those buyers practically enter the market who are able and willing to give the market price.