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(1) Price: producers will try to obtain the highest possible price whereas the buyers will try to pay the lowest possible price both settling at the equilibrium price where supply equals demand. (2) Cost of inputs: the lower the input price the higher the profit at a price level and more product will be offered at that price.

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The plan from which the Principles of Political Economy, and Taxation originated had taken shape soon after the publication of the Essay on the Inuence of a Low Price of Corn on the Prots of Stock in February 1815. At rst Ricardos intention (at James Mills suggestion) had been merely to produce an enlarged version of the Essay.

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