The Laws of Supply And Demand

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We come then to see that the fundamental fact underly- ing over-production is the time-element in value and we are helped to an economic definition of it. It depends on the difference between the rate of output and the rate of sale and it is caused by the impossibility of always adjusting production to the fluctuations of demand.
Over-production in one industry, in many or in all together is an acceleration of the rate of production over and above the rate of absorption of the market, where the
... demand follows its usual course, or a retardation of the rate of absorption of demand, while the rate of production temains constant, resulting in either case in a fall in values, * which may either be liquidated by immediate depreciation or be carried over at former prices for future * As we saw in Cap. V. , p. 44, that there might be a general rise in values, so also there may be a general fall in values, which would be the result of general over-production.
200 THE LAWS OF SUPPLY AND DEMAND liquidation.


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