The Eight Hours Day

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Iv. § 1.
THE PR OB ABLE E CO NO MIC RES UL TS. 115 loss of custom. Retail prices are much more fixed by custom, and by the amount of the nearest current coin, than economists usually assume.
In the cases of such virtual monopolies as railways, tramways, gasworks, waterworks, docks, etc. , prices are fixed with reference chiefly to the curve of demand. The aim in view is, of course, not the greatest gross return, but the greatest nett profit, and differences between much and little business in t
...he expense of production cannot be left out of account. But in all these cases a large part of the expense of production is very slightly affected by moderate variations in demand or supply. Railway and tram- way companies cannot reduce their working expenses in anything like exact correspondence with a falling traffic. Nor do they need to increase them in proportion to a rising one. Passenger fares and goods rates are therefore avowedly fixed mainly upon a view of "What the trade will bear" — that is to say, not at the cost of production, but at such amounts as will induce the greatest possible amount of traffic, consistently with covering the bare cost of the increased business.

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