about, are constantly taking place, but which itself is reached only
by accident, if at all. Whenever we say that some new factor should in
the long run lower the price of this or that commodity or service, the
picture which these words should convey to our mind is one of the
price rising less on times of boom, and falling more in times of
depression than is the case with other things. And if ever our faith
in some honored economic law is shaken by the apparent ease with
which, perhaps, in times of active trade, sellers are able to advance
their prices to whatever figure (so it almost seems) they choose to
name, let us rally our sense of economic rhythm, and reserve our
judgment until the trade cycle has run its course.



CHAPTER III

UTILITY AND THE MARGIN OF CONSUMPTION


§1. _The Forces behind Supply and Demand_. The laws enunciated in the
preceding chapter constitute the framework and skeleton of all
economic analysis; but they do not carry us very far. It is only
through the agency of these laws that any influence can affect the
price of anything: but what influences may so affect it is a question
which we have still to consider.

Let us begin with ordinary commodities and ask ourselves, in the light
of experience and common sense, upon what factors their price seems
mainly to depend? Two factors spring to mind at once; their cost of
production and their usefulness. As regards the former, the case seems