supply. It is supposed to be so drawn that if any point _q_ be taken
upon it, and the perpendicular _q_N be drawn to meet OX, then ON will
represent the amount that will be supplied at a price represented by
_q_N (or O_k_). Equally clearly this supply curve must slope upwards
from left to right, since the higher the price obtainable, the greater
will be the quantity offered. Take the point P where the two curves
meet, and draw the perpendicular PM to meet OX. Then the third law
enunciated at the beginning of this chapter corresponds to the
statement that PM or O_m_ will represent the price at which the
commodity or service will be exchanged.

It can readily be seen that no other price could be maintained. For
suppose the price to be less than O_m_, suppose it to be O_k_, then,
at this price, ON (or _kq_) will be the amount supplied, and _kr_ the
amount demanded. The demand will thus exceed the supply, and the
price will tend to rise, i.e. to move upwards towards O_m_. Similarly
if we suppose the price to be O_l_, which is larger than O_m_, the
supply (_l_R) will exceed the demand (_l_Q) and the price will fall
downwards towards O_m_. Thus, again, we have deduced Law III from Laws
I and II with the form and precision of a proposition in Euclid. Now,
when once the eye has become familiar with this diagram, it ought to
be impossible for the mind to lose even momentarily its grip on the
fact that demand and supply are both dependent upon price. For these
curves do not represent any particular amounts; they represent a
series of _relations_ between amount and price; if the price is QN the
amount demanded is ON, and so forth. The terms demand and supply in
the sense, in which I have been using them, of the respective amounts
demanded and supplied are, indeed, strictly meaningless without
reference to some particular price. The reference may sometimes be
implicit; but, whenever there is a chance of ambiguity, it should be