16 From what we have just seen [the last section], for a commodity which exchanges freely in a given market, between a group of producers and a group of consumers, if each individual always remains free at each instant to fix his own price, and to increase or decrease his production or consumption, there will finally be convergence, in the market, towards a certain equilibrium price p, for a certain quantity x of goods produced and consumed, p and x being well determined by the curves, say, Γand C. In fact, for a large number of goods, these conditions are roughly realized, and one can accept that the price which establishes itself in reality is nearly the theoretical equilibrium price.

The price depends: on the general economic situation (always supposed constant, in all of this study), on supply and on demand. Now these three elements never stop varying, and, during the course of time, the price follows their variations. In the second part of this study an attempt is made to distinguish by observation between these complicated influences. But we are able to predict here the direction of the variation which will tend to produce a change in each of the two last factors, supply and demand.

We shall say that the supply increases when the indifference curve Γ of the producers passes from Γ2 to Γ'2 (figure 17.1); then to the same indifference price there corresponds a greater quantity produced, and to the same indifference production there corresponds a lower price.