ill illustrate the
nature of these relations.

AL is the line indicating at the several points, B, C, D, etc.,
proportional increments in supply. If the monopoly be a steel rail
trust, B marks the millionth ton, C the two millionth ton of output,
and so on. A'L' is a curve indicating, by its diminishing distance
from AL, the diminishing expense of producing each unit of the
increased output, so that the expense of producing the first ton, if
only one is produced, is AA', that of the millionth ton, if one
million are produced, BB', and so on. The expenses of producing one
million tons will thus be represented by the figure ABB'A', those of
two millions by the figure ACC'A'. Further, let the curve _al_
represent, by its diminishing distance from AL, the diminishing price
at which the several additions to supply can be sold, so that the
first ton sells at A_a_, the millionth at B_b_, and so on, the
aggregate price of the first million tons being AB_ba_, that of the
first two millions being AC_ca_.

[Illustration: DIAGRAM OF TRUST PRICES.]

Assuming that the Trust is planning a new business and determining the
most profitable output, it will limit that output not necessarily at
the point where the selling price gives the widest margin of profit
upon the expenses of production, as might be the case at the point B
in the diagram, but at the point F, where the margin of profit bears
the largest proportion to the expenses of production, or in other
words, where the area of absolute takings shows the largest surplus
over the area of aggregate expenses. Thus it will here be to the
interest of the Trust to produce and sell six millions (limiting
production at F) with an aggregate expense AFF'A' and an aggregate
takings AF_fa_, yielding an aggregate net profit A'F'_fa_. They will
not produce five millions because the figure AE_ea_ bears a smaller
proportion to AEE'A' than does AF_fa'_ to AFF'A'. For a similar reason
they will not produce seven millions.

Since the fluctuations in the curve of expenses and in that of selling
price or "demand" are determined by an entirely different set of
forces, it will be evident that there may be several points in AL
where the proportions between the area of expenses and that of profits
may be the same. So there may be several maxima at which Trust prices
may be indifferently fixed. The figure upon F'_f_ may have the same
quantitative relation to the figure upon FF', as that upon H'_h_ t