The first of the two following figures is a graphical illustration of the supply schedule contained in the preceding section. It costs sixty cents to produce the second unit, seventy cents to produce the third unit, eighty cents to produce the fourth unit, etc. This is represented in the figure by making the curve op cut the perpendicular lines, 2, 3, 4, etc., at .60, .70, .80, etc. The second figure represents a combination of this supply curve and the demand curve in the previous paragraph.

In Figure V. on the opposite page the number of units demanded or produced at different prices is represented along the line OX, while the prices which purchasers are willing to pay or for which the competing sellers can produce different quantities of the commodity are represented along the line OY. The market price is fixed at the point where the demand curve and the supply curve cross. With demand what it is, the purchasers will not cease to produce until the supply curve meets the line of the demand curve. On the other hand, the producers cannot afford to produce beyond this point, for the reason that every additional unit produced is produced at a loss. In this instance the supply curve crosses the demand curve at a point indicating that six units of the good will be produced and that they will be sold at one dollar each.

Figure IV. - Supply Curve.

Figure V. - Combined Supply Curve and Demand Curve.