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Principles of economics

This principle can be applied in almost every field of economic research. The fourth section is the production cost of a representative enterprise. Our starting point is this: we consider the equilibria of normal demand and normal supply in their most general form; we leave aside those characteristics which are peculiar to particular branches of economic science, and concentrate our attention on those general relations which are common to almost all economic sciences. We assume, therefore, that demand and supply act freely; that neither buyers nor sellers are closely associated, that each acts alone, and that there is a great deal of free competition; that is, buyers are generally free to compete with buyers, and sellers are generally free to compete with sellers. Although everyone acts alone, we assume that he generally knows enough about what others are doing so that he does not ask for a lower price or pay a higher price than others. Assume for a moment that this applies to all kinds of finished products and their factors of production, to the hiring of labor and the borrowing of capital. To what extent these assumptions fit with real life has been studied to some extent and will be further studied. But in the present case we proceed on the assumption that there is only one price in the market at the same time, and it is also self-evident that we do not, if necessary,silk ficus tree, take account of the differences in freight that exist when goods are transported to traders in different parts of the market; And if it is a retail market, we also have to take into account the special costs of the retail business. In this market, there is a demand price for each quantity of a commodity, that is, there is a price at which each specific quantity of the commodity will find a buyer in a day,large artificial blossom trees, a week, or a year. And the circumstances which govern the price of any given quantity of that commodity vary in character from one case to another; but in every case the more that is offered for sale in a market, the lower is the price at which a buyer is to be found; in other words, the price demanded per bushel of grain or per yard of cloth decreases with every increase in the quantity offered for sale. The unit of time can be chosen according to the circumstances of each specific problem: it may be a day, a month, a year, or even a generation. But in either case it is necessarily short relative to the duration of the market. We shall assume that during this period the general conditions of the market remain unchanged; for example, there are no changes in style or taste, no new substitutes affecting demand, silk olive tree ,Faux cherry blossom tree, no new inventions disturbing supply. Normal supplies are more uncertain; a full study of them will have to be left to subsequent chapters. They differ in detail according to the length of the period considered; the main reason is that both the physical capital of machinery and plant and the immaterial capital of business skills and organization grow and decay slowly. Let us recall that "representative enterprise", whose internal and external economies in production depend on the total production of the goods it produces. Leaving aside for the moment all further investigation of this dependence, let us suppose that the normal supply price of any quantity of the commodity can be regarded as the normal production cost of the factory to it (including the gross profit of operation). That is to say, let us assume that it is a price whose expectation is just sufficient to maintain the present quantity of production, while some firms are rising and increasing their output, and some firms are declining and decreasing their output, but the quantity of production remains the same. Higher prices promote the growth of thriving firms, mitigate (but not reverse) the collapse of declining ones, and the net result is an increase in total output. On the contrary, lower prices will accelerate the collapse of declining enterprises and weaken the development of flourishing enterprises; Reduce production in general. The rise or fall of prices has the same effect, though in varying degrees, on large corporations, which tend to stagnate and rarely collapse. Section V Supply Schedule. To make our concept clear, let us take the example of the wool industry. Let us suppose that a person familiar with the woolen industry wants to find out what the normal supply price of a certain kind of woolen cloth is for millions of yards per year.
He must calculate (1) the price of the wool, coal, and other raw materials used in the weaving of this felt, (2) the wear and tear and depreciation of the plant, machinery, and other fixed capital, (3) the interest and insurance on all capital, (4) the wages of the factory employees, and (5) the gross profit on the business (including the insurance on losses) of the people who bear the risk, plan, and supervise the business. He will, of course, calculate the price of the supply of the various elements according to the quantity used, and assume that the supply situation is normal; he adds these supply prices together to find the price of the supply of woolen cloth. We assume that the supply price list (or supply list) is formulated in the same way as our demand price list. The price of the supply of each quantity of the commodity in a year or any other unit of time shall be juxtaposed with that quantity. With the increase of the annual output of commodities, the supply price can increase or decrease, or even increase or decrease alternately. For if nature were to offer stubborn resistance to the efforts of man to obtain more of its raw materials, and there was no room for the adoption of new and important economic methods in industry at that time,silk ficus tree, the price of supplies would rise; but if the volume of production was large, it might be profitable to replace manual labor with a large number of machines, and the increase in the volume of production would inevitably reduce the cost of production in our representative enterprise. But the fact that supply prices fall as output increases is bound to create special difficulties for them; These difficulties are discussed in Chapter 12 of this article. Section 6 Equilibrium output and equilibrium price. The supply price of a commodity is not closely related to its actual production cost. The true meaning of normal equilibrium. The meaning of the term "long term". hacartificialtree.com