ABSTRACT
Economics or political economy, is sometimes defined as the science of supply and demand. Although this is an inadequate definition it cannot be said to be altogether misleading. A very important part of Economics, and the part which probably has the best title to the name of science, has to do with the operations of supply and demand and with the way in which variations of supply and demand are related to the movements of prices and to changes in the production and distribution of wealth. The “law of supply and demand” was not invented or discovered by the economists, however, nor do they lean very heavily upon it as a general explanatory formula. Long before there was any systematic analysis of economic processes men had observed that prices vary with supply and demand, and from the earliest days, traders have had to take account of that circumstance. The economist’s task has been to scrutinise those characteristics of human behaviour and of the physical environment which determine the various forms or patterns in which supply and demand appear and to enquire into the complicated interactions of the demand for and the supply of different commodities and services.
