Based on these principles, the portion of Smith's value scale relevant to our analysis is shown at the right. (You may need to scroll down to view the entire diagrammed portion.) If the price is attractive enough, Smith will decide to sell one or more of his three cows. The number of cows that Smith and other sellers will exchange on the market at a given price is known as the supply of the good. At a price of 26 hens per cow, for instance, Smith will relinquish even his first, most highly valued cow, selling all three cows for a total of 78 hens. His personal supply at this price is thus 3 cows. If the price ranges between 23 and 25 hens, Smith will supply 2 of his cows to the market, but will be unwilling to offer his remaining cow (that is, his "1st cow"), which he values more highly than 25 hens. If the price dips to 22 hens, he will no longer be willing to relinquish even his second cow, and will therefore offer only 1 cow.    Next page
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