nt the article are actually willing to take and
pay for larger quantities the lower the price falls. Mere desire does
not influence the market, but an "effectual demand" means a desire and
a tender of the money that is asked for the goods. It is, in short, an
actual purchase and the amount of it becomes larger as the price goes
down. People who did not buy the article before now add it to the list
of goods that they take for use, and the people who were already
taking a certain quantity of it now take more.

_Equation of Supply and Effective Demand._--If this effective demand,
or amount of goods actually bought and paid for, becomes steadily
larger the lower the price becomes, it is clear that, however large
the total supply may be, it can all be sold by making the price low
enough. It was once thought that this is all we need to know of prices
current or market values. At some selling rate or other the quantity
actually offered will come to equal the quantity that is actually
bought. This is the equation of demand and supply. The quantity
offered is here supposed to be fixed and to include all of the
article that is in dealers' hands and that has to be sold; and the
price, starting at a high rate, is supposed to go down till the sale
of the entire quantity is effected.

_Varying Demand and Price._--The facts that have just been stated
account only in a partial way for the adjustment of market price. One
who wishes to trace phenomena to their causes cannot help asking why
demand and supply insure the selling of a given amount of goods at one
rate rather than at another. If apples are offering at two dollars a
barrel, why is it that, in a particular local market, one thousand
barrels and no more can, at that rate, be sold? We can readily see
that at one dollar a barrel more could be sold than at two, and that
at three less would be sold. But why is it that, at two dollars, the
definite number of one thousand barrels is the amount that is taken
and paid for? Why is the equation of demand and supply established at
exactly that price?

_Demand and Final Utility._--We come nearer to the cause that acts in
adjusting the price of apples when we say that they sell at two
dollars a barrel because that sum expresses their "final utility."
This means that, if such an auctioning process as we have described
were resorted to, the last barrel of apples which would be sold would
have to the buyer an amount of utility just equal to