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Chapter 08 - Analysis of Perfectly Competitive Markets

CHAPTER 8
Analysis of
Perfectly Competitive
Markets

CHAPTER OUTLINE

I. Supply Behavior of the Competitive Firm

a. Behavior of a Competitive Firm
i. Profit Maximization
ii. Perfect Competition
iii. Competitive Supply where Marginal Cost Equal Price
iv. Total Costs and the Shutdown Condition
II. Supply Behavior in Competitive Industries
a. Summing all Firm’s Supply Curves to get Market Supply
b. Short-Run and Long-Run Equilibrium
i. The Long-Run for a Competitive Industry
III. Special Cases of Competitive Markets
a. General Rules
i. Constant Cost
ii. Increasing Costs and Diminishing Returns
iii. Fixed Supply and Economic Rent
iv. Backward-Bending Supply Curve
v. Shifts in Supply
IV. Efficiency and Equity of Competitive Markets
a. Evaluating the Market Mechanism
i. The Concept of Efficiency
ii. Efficiency of Competitive Equilibrium
iii. Equilibrium with Many Consumers and Markets
iv. Marginal Cost as a Benchmark for Efficiency
b. Qualifications
i. Market Failures
ii. Two Cheers for the Market, but Not Three
V. Summary

8-1
Chapter 08 - Analysis of Perfectly Competitive Markets

CHAPTER OVERVIEW AND TEACHING TIPS

After finishing your discussion about costs, you are now ready to impart your first presentation of market
structure: Perfect Competition! Although you might anticipate an easy and intuitive transition from costs to perfect
competition, your students might disagree with you. After all, why should we study the perfectly competitive
model? If it is not real then it is not useful, right? Our advice: do not try to come up with frivolous examples of
perfect competition in the real world, like hotdogs in a baseball park! Your students are smarter than you think and
you don’t want to lose credibility at this crucial stage of the game! Instead, reinforce the important role that the
competitive market model plays as a benchmark for the maximization of efficiency, in particular when confronting
distortions due to externalities. This will be an interesting battle but one that you can win.
With cost concepts still fresh, the presentation and development of the competitive model should be
manageable. Many of the ideas built into this model are important to a sound understanding of even elementary
economics. Your goal should be to make students comfortable with the concept of perfect competition, the
relationship between cost curves equilibrium determination within this market structure, and in particular the
behavior of profits in the long-run. Students sometimes tend to associate the short-run decision to shut-down with
the long-run profitability condition of zero-economic profits. Anticipate arguments such as “if they are not making
money” referring to zero-economic profits “then they must shut down.”
Take advantage of the four special cases of competitive markets considered in the chapter (horizontal, upward-
sloping, vertical, and downward sloping supply curves) to transition within the chapter. Finally, reinforce the
efficiency properties of the perfectly competitive model as a transition tool to the other market structure models that
will follow.

LEARNING OBJECTIVES
1 Describe the characteristics of a perfectly competitive industry, and explain how these characteristics limit
the sphere of economic variables over which a single competitive firm has influence.
2 Identify the profit-maximizing goal of the individual perfectly competitive firm, and indicate decision rules
through which each firm can achieve this goal.
3 Review the notions of total cost, fixed cost, variable cost, average cost, and marginal cost.
4 Derive the supply curve of a competitive firm from the marginal cost curve.
5 Explain the break-even and shutdown conditions and their relevance to the competitive marketplace.
6 Explain the long-run and short-run equilibrium conditions for the competitive firm and the competitive
market.
7 Explain why and under what conditions the supply curve might be (a) horizontal, (b) upward sloping, (c)
vertical, and (d) downward sloping.
8 Provide examples of markets in which these special cases of supply may be relevant.
9 Explain the efficiency of perfect competition in terms of (a) marginal cost and marginal utility and (b)
consumer surplus and social welfare.
10 Contrast efficiency with equity as goals of an economic system, and discuss the role of each goal in
developing policy. Discuss qualifications to the efficiency results.

SUGGESTED ANSWERS TO QUESTIONS IN THE TEXT

1 a. A competitive firm will produce output up to the point where price equals marginal cost if it is to
maximize profits.
b. A firm’s shutdown point comes where price is less than the minimum of average variable cost.
c. A competitive firm’s supply curve depends only on its MC above the shutdown price where MC = AVC.
d. The rule does not hold for downward-sloping MC. Given diminishing returns, MC eventually begins to rise; P =
MC on downward slope is not a profit maximum. To see why, consider increasing output to 1 unit from the
downward intersection; profits climb!
e. A competitive firm chooses output to set marginal cost equal to price. It has no discretion over price.
2 a. You should shut down.
b. Produce 1000 units and profits is – $5000.
c. Produce 1000 units and profits are $5000. Because you are covering you variable cost you only lose $5000 instead
of $10,000 if you shut down.
There is a mistake in the question. Fixed cost should NOT go to $ 0 if you shut down.
3 The profit maximizing level of output is 4000 units for each fixed cost listed. Note that maximum profits
are positive for FC = $0, $55,000, and $30,000 and negative for FC = $100,000 and $l,000,000. Any firm should
continue to produce in the short run if it can cover its variable costs and at least a portion of its fixed costs.
8-2
Chapter 08 - Analysis of Perfectly Competitive Markets

4 Price = $21; Q* = 3000; profits = $63,000 - $130,000 = -$67,000; firms should exit. Price = $40; Q* =
4000; profits = $160,000 - $160,000 = $0; stable long-run equilibrium. Price = $60; Q* = 5000; profits = $300,000 -
$210,000 = $90,000; firms should enter.
5 ES = [(4001 - 4000)/4000]/[(40.02 - 40.00)/40.00] = O.5. For the industry supply, multiply the single-firm
quantity by 2000 for each price. The supply elasticity does not change. Both the numerator and the denominator of
the “percentage change in quantity” part of the elasticity ratio are multiplied by 2000; the 2000s therefore cancel and
do not change the elasticity estimate.
6 At competitive equilibrium, the price that people are willing to pay for output is less than the smallest MC
for firm C. If C produced 1 unit more and B 1 unit less, total industry cost would increase by [MCC(l) - MCB (last)].
Economies of scale drive “Mom and Pop” stores out of business, except for those having locational advantages (e.g.,
convenience), service advantages, etc. The legislation would increase food prices because equal shares would not
achieve total cost minimization, which only occurs when MCs are equal across firms.
7 Short-run demand is more inelastic than long-run demand. Consult Figure 8-1. At some initial price and
quantity P0 and Q0, short-run demand DD is drawn steeper than long-run demand dd to reflect relatively less elastic
demand at (Q0, P0). A decline in supply from s0s0 to s1s1 produces a dramatic price spike in the short run with little
contraction in quantity (movement from E to ED). Over time, however, conservation and substitution possibilities
are exploited; greater quantity reduction relieves some price pressure, and equilibrium moves toward Ed along s1s1.

Figure 8-1

A decreased supply will increase price most when demand is inelastic. A decreased supply will decrease quantity
least when demand is inelastic. Since demand is more inelastic in the short-run than in the long-run, the effects of a
decrease in supply on price and quantity will decline over time.
8 The definition of pure economic profit includes the opportunity cost of owners’ labor and capital
investment. When a firm is earning economic profit, it is more than covering opportunity costs. Economic profits
are driven to zero in perfect competition, so resources are earning exactly as much as they would earn at their next
best alternative use.
9 a. This curve describes how much it will cost to reduce the amount of pollution by one additional unit.
b. Firm A should produce six units of pollution reduction, Firm B should produce four units of pollution reduction,
and Firm C should not participate in the market.
c. If Firms A and B each produce five units of pollution reduction, Firm B will produce its fifth unit at a higher cost
than Firm A would have had to pay for its sixth unit of pollution reduction. Thus costs are higher by the difference
between the cost of Firm B’s fifth unit and Firm A’s sixth unit.
d. P* would be the optimal charge for the pollution authority to establish. Firm A will “produce” six units of
pollution reduction, Firm B will “produce” four units of pollution reduction, and the marginal cost in the market will
equal the marginal benefit of pollution reduction. Further reduction of pollution would cost more than the value that
it would generate for society.
10 Allocative efficiency means that no reallocation of resources can make one party better off without hurting
another. At the equilibrium point E in Figure 8-11, MC=P; this means that the cost of the last unit produced was just
equal to the value of it to the consumer. If fewer goods were produced, then some consumers would be made worse
off. If more goods were produced, then some producers would be made worse off.

8-3
Chapter 08 - Analysis of Perfectly Competitive Markets

DISCUSSION QUESTIONS
1. Why would a firm ever supply goods at a loss along a short-run marginal cost curve?
2. One of the most important rules in economics is “Let bygones be bygones.” This means that fixed costs
already incurred should be ignored in making short run decisions; only incremental or marginal costs
should be computed. Relate this to Table 8-1 in the text by looking for the profit-maximizing level of
output when fixed costs are $0, $55,000, and when someone gives you $50,000 to start the business. How
does this concept apply when you look at the price you originally paid when you sell your house?
3. Given the supply curve of each individual firm, how does one construct the industry supply curve? Are
there any difficulties in finding the long-run industry supply curve? If there are 1000 identical firms in the
industry, what will the industry short-run supply curve look like, compared to those of the individual firms?
4. The directors of a business firm once fired its president for refusing to produce an extra unit that would
have cost only $1 and could have been sold for $3. Were they crazy? Why or why not?
5. “The rule that states that price equals marginal cost equals marginal utility holds even in a total planned
economy as long as the planners are attempting to maximize net social welfare measured by total consumer
surplus.” Discuss the accuracy of this statement.
6. “The existence of decreasing cost industries can undermine the competitive pricing system.” Discuss.
7. Discuss the role of constant returns to scale in a competitive market. Argue, in particular, why CRS would
make it impossible to predict the number of firms in long-run equilibrium.
8. List and explain the importance of the characteristics of a perfectly competitive industry.
9. Carefully explain why the perfectly competitive firm faces a perfectly elastic demand curve. How can the
firm’s demand curve be perfectly elastic when the industry demand curve is downward-sloping?
10. Define the term consumer surplus. Show the area on market diagrams that represents this area of surplus.
Define the term producer surplus. Show the area on market diagrams that represents this area of surplus.
11. For each of the following examples, decide which of the special cases of competitive markets applies. Use
a supply-and-demand diagram to explain each of the observations.
a. When the federal individual income-tax rate fell after 1981, a leading movie star did not change her
supply of labor.
b. As wine became more popular, the price of wine rose sharply.
c. Even though real wages have increased considerably since 1900, hours of work have fallen.
12. What is the effect of a per-unit tax when supply is as described in each of the special cases of competitive
markets? Use diagrams to describe the effect of a tax in each case.
13. You hear that your doctor has increased the prices charged for services. She has also canceled office hours
on Wednesday afternoons and will be playing golf instead. Does this mean that her labor supply curve is
downward sloping? Explain using a diagram.

ESSAY QUESTIONS
1. “Perfect competition can be a useful industrial structure if our goal is to give people the goods they want at
the most efficient modes of production and in the right quantitative amounts, where marginal costs and
utilities balance. If dollar votes are grossly inequitable, however, then this efficiency will not bring
equity.” Use tools of supply and demand to explain the correct and incorrect portions of this statement.
2. You are given the following supply schedules for two firms:
Firm A Firm B
Price Quantity Price Quantity
$0 0 $0 0
1 0 1 2
2 0 2 4
3 2 3 6
4 4 4 8
5 6 5 10

a. Construct the market supply schedule for the combined firms.

b. What increase in supply will a $1 increase in price elicit from firm A? From firm B?
c. What increase in market supply will an increase in price from $1 to $2 elicit? An increase in price from
$3 to $4?

8-4
Chapter 08 - Analysis of Perfectly Competitive Markets

3. “Summing horizontally, the decreasing MC curves of 1000 identical firms give us an industry supply curve
that looks like a hundredfold horizontal blowup of each one.” Discuss this statement in light of the relation
between decreasing internal cost for the firm and the possibility of a downward-sloping supply for the
industry.
4. “My firm, which has a rising short-run MC curve, is now operating at a loss. If P rises a little, I will not
increase Q because MC would go up and I’d just be taking a greater loss on a higher volume.” Is this
reasoning correct? Why or why not? Use a diagram to illustrate your answer.
5. Consider an industry composed of 1000 firms. Describe this industry’s long-run supply curve when (a) free
entry exists, and (b) there is no possibility of new firms entering the industry.
6. List and discuss the conditions that must exist for the long-run supply curve of a competitive industry to be
infinitely elastic. Under what conditions will it be upward sloping?
7. “In a perfectly competitive industry, the efficient firms will come to displace the wasteful firms.” Explain,
using cost diagrams when appropriate.
8. Given a firm’s marginal cost curve, explain how to derive its supply curve. In the short run, at what point
will the firm cease producing anything at all? Discuss.
9. Explain why the existence of decreasing costs for a firm is incompatible with the economist’s model of
perfect competition.
10. “The concept of marginal cost has great importance for welfare economics. The resources of society are
being efficiently allocated and used only if there is an equality in the marginal costs of similar goods
produced everywhere.” Discuss.
11. Will markets always lead to an efficient allocation of resources? What sorts of market failure exist? List
examples of situations in which markets have been seen to fail.
12. Does efficiency always lead to equity in the distribution of resources? Why might these goals of an
economic system sometimes contradict one another?
13. If an industry has a perfectly elastic supply curve, why is it described as a “constant-cost” industry? How
might expansion of industry output result in no changes in output price?
14. Some economists claim that the best way of raising revenues for government is to tax land. Why might this
be? What is the result of a tax on something that is supplied inelastically?
15. “If all workers in a particular labor market have backward bending individual supply curves, the market
supply curve will also be backward bending.” Is this statement true or false?
16. Under what conditions would a firm operate in the short run if they are losing money?
17. What are the operating profits of a competitive firm in the long run?
18. Why would a firm continue to operate in the long run if profits are zero?

8-5
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 CHAPTER XV
THE RUSHING RIVER

For a moment the lad stood as though turned into stone, astounded
and appalled. Then he realized what had happened.
The alligator, following a custom of its kind, had buried itself in the
soft mud, on the same principle that a bear hibernates in winter.
Probably a flood some time before had inundated the district and the
alligator had come with it. When the flood receded the alligator had
remained in its self-imposed burial place. The soft mud had caked
and hardened, but still the alligator slept on.
The weight and warmth of the boy’s body had aroused it, and now it
was issuing forth to renew once more its active life.
For a moment the great brute seemed as much surprised as the lad
himself, and looked stupidly at the invader of its retreat.
But only for a moment. Then a hideous bellow issued from its open
jaws, its fiery eyes snapped with malignity, and it made a lunge at
the jungle boy.
But the lunge was an instant too late.
For Bomba had shaken off the paralysis that the sight of the monster
had brought upon him, and with one bound had cleared the doorway,
leaping high over the fire that blazed in front of the hut.
With speed incredible in so clumsy a creature, the alligator pursued
him. But it could not leap like Bomba, and with the torpor of its long
sleep confusing it and the light of the fire blinding it, plunged
headlong into the flames.
There was a tremendous bellowing and thrashing about, a scattering
of the embers in every direction, and then the half-blinded creature
lumbered out and made for the jungle, forgetting in its own pain and
bewilderment all about its human enemy.
Bomba had not the slightest desire to hinder its going. He probably
could have slain it with one of his arrows, but he forbore, glad
enough to be rid so suddenly of an awful problem.
But there was no more sleep for him that night. He had been too
thoroughly shaken. He made up the fire again and sat down beside
it, keeping a careful watch lest the monster, still lurking in the vicinity,
should return to take vengeance on the author of its misadventure.
But nothing happened during the remainder of the night, and at the
first streak of dawn Bomba made a hasty breakfast and set out once
more on the trail.
The jungle thinned as he went on, and he was able to make such
rapid progress that it was only a little after noon when he reached
the banks of the great river in which somewhere was Jaguar Island.
It was a black, ominous stream, with a current that ran like a mill-
race. At intervals along its length were foaming rapids that made
navigation extremely perilous. Islands dotted its expanse here and
there, but none of these within Bomba’s sight were of any great size.
Where Bomba stood the river was about half a mile in width, but a
little further down it expanded to more than twice that width. Great
trees fringed the banks, the foliage reaching far out over the water.
Bomba hunted the banks for a long distance on the chance that he
might find the canoe of some Indian, either abandoned or hidden in
the sedge grass near the shore. He was an expert in navigating that
type of craft, and would have felt much safer in it than on a raft that
would be wholly at the mercy of the torrent.
But, search as he would, he could find no craft of any sort, and when
he had fully convinced himself that there was no other alternative, he
set to work to build his raft.
There were plenty of fallen trees and broken branches that had been
victims of one of the storms that had swept the jungle, and the boy
had little difficulty in getting enough of the right size and shape of
logs to make the raft he had in mind. It was not to be an elaborate
structure, but it must be strong, for upon its stability his life might
depend.
He had no implements of any kind, except his machete. He had no
nails or hammer with which to fasten a flooring to the logs to hold
them together. But there was an abundance of withes and creepers
that, twisted together, were as strong as any rope, and these he
wound about the logs in such a way that they could not break loose
from one another.
It did not add to his peace of mind to note from time to time an
alligator’s body break the water. Sometimes they sank again after a
lazy glance. More often they swam around sluggishly, watching
Bomba with their little eyes as though calculating how long it would
be before he could be depended on to furnish them a meal. It was
evident that the river was fairly swarming with the terrible creatures.
But these were foes that could be reckoned with, foes that were not
immune from arrow and knife. They were different from ghosts and
demons, those vague, shadowy, yet awful things of which Hondura,
Neram and Ashati had spoken.
Were there any such things? Bomba did not believe there were. Still,
he would have given a great deal to have been perfectly sure on that
point. And almost involuntarily at times his eyes would wander to the
surrounding jungle.
After two days’ labor his work was done, and he surveyed it with
satisfaction. It was as nearly square as he could make it and
sufficiently large so that it would not easily overturn. In addition to the
raft, he had shaped a rough paddle for his steering and a long pole
to work the raft loose, if it grounded in a shallow.
He had been working close to the edge of the bank, and when the
raft was completed he pushed it over into the water. Then he jumped
on board and, standing near the front with the paddle in his hand,
committed himself to the mercy of the current.
It was late in the afternoon when he started, so late, in fact, that he
was almost tempted to wait till the following morning. But now that he
was so near the completion of his journey the urge in him to hurry
was too strong to be resisted.
The moon was full and would rise early, and from this he would get
all the light he needed.
The current was stronger than he had thought, and the clumsy raft
was borne along upon the surface at a surprising rate of speed. At
times it was caught in a cross-current and whirled about, and Bomba
had all he could do to keep his balance. And it was extremely
desirable that he should keep his balance. It would not do to be
thrown into the water.
For Bomba had not started alone. A grim retinue accompanied him.
As he had conjectured, the river was alive with caymans. Some were
swimming along behind him, their greedy eyes fixed unblinkingly
upon the daring young voyager. Others came to the surface as his
raft was carried along and joined in the procession. Once let Bomba
get in the water, and he would be torn to pieces in a twinkling.
No one knew this better than the lad himself, and every nerve in his
body was at its extreme tension.
Not only from his foes in the water was he in danger. At times the
current swept him in so close to the shore that he passed under the
branches of the overhanging trees. These, too, he had to scan, lest
any innocent looking bough should suddenly come to life and prove
to be the body of an anaconda ready to dart down like lightning upon
its prey.
Once he came to a rapids where the churning water made all
attempts to steer impossible, and his raft was tossed about like a
chip. One sudden heave threw Bomba to the floor of the raft, and he
all but slid into the water. But he caught his hands in the crevices of
the logs and held on for dear life.
And now he noted that the alligators were closing in upon him. They
were growing impatient. Hitherto, they had been content to follow the
raft, expecting every moment that the craft would be upset. But as
time passed and this did not happen they became more ugly and
aggressive.
One of them swam under the raft and then rose suddenly, lifting it on
its back, almost upsetting it. The raft rose to a perilous angle, but
righted just in time and fell back with a splash into the water.
The ruse had not succeeded, but there was little doubt that it would
be repeated, and Bomba concluded that it was time to teach his
enemies a lesson.
He selected the largest of the alligators, and, reaching for bow and
arrow, took careful aim at one of its eyes. The arrow went straight to
the reptile’s brain. Its dying flurry churned the water into foam, but
before the body could sink half a dozen of its mates were upon it.
In a minute they had torn the body into fragments and the water was
red with blood. The monsters sank to the bottom to regale
themselves.
The killing of the cayman helped Bomba in more ways than one. It
not only reduced the number of his enemies, but it kept the others
busy with the feast that its body provided. Moreover, it taught the
brutes that the boy was not as helpless as they had supposed, and
they were likely to be a trifle more wary and cautious in future.
While the caymans were disposing of their booty, the swift current
had carried Bomba a long distance ahead. His eyes strained through
the gathering darkness, but he could see nothing of his former
pursuers. He hoped that he had shaken them off.
Vain hope! For in a little while he could see phosphorescent gleams
in the water behind him that he knew marked the trails of the
caymans.
They were coming again. Their appetite for blood had not been
satiated. Rather it had been whetted.
They wanted Bomba! And they were determined to have him!
 CHAPTER XVI
JAGUAR ISLAND

Despite his iron courage, Bomba could not repress a shudder.

To be sure, he still had his bow and arrows, and what he had done
once he might do again.
But now he was handicapped by the darkness. It had come on
swiftly. It would be almost half an hour before the moon would rise.
And how could he shoot in the darkness at such a tiny target as the
eye of the alligator?
For he must kill it there or nowhere. Against the tough, scaly armor
that covered the brute from snout to tail, fifty arrows might strike as
harmlessly as hail on a roof.
He strained his eyes through the darkness ahead, hoping to see
some still blacker blot that might betray the presence of land. He felt
that by now he must be somewhere in the vicinity of the island of the
big cats. Whatever danger awaited him there, he would face gladly
rather than endure the fate that threatened him from the waters in his
wake.
Those phosphorescent streaks were drawing closer now. One in
particular was not more than twenty feet away.
Then there came a rush, and a huge alligator hurled itself out of the
water and came down with half its body on the raft. Its open jaws
snapped at Bomba’s legs.
Quick as lightning, Bomba grabbed the long pole, and with all the
strength of his muscular arms rammed it down the monster’s throat.
The brute slid off the raft into the water, and instantly its comrades
were on it like a pack of wolves.
Relieved of its burden, the raft righted and swung ahead in the
current. A moment later it came up against a jutting point of land with
a shock that almost jarred Bomba off his feet.
But he caught hold of an overhanging branch and held the raft
steady. Gradually he pulled it in until it grounded on a shelving
beach.
Still maintaining his hold on the bough with one hand, Bomba took
from around his neck where he had wound it a strong rope of
creepers and fastened the raft to the bough so that it could not drift
away. Then he leaped to shore.
He threw himself on the ground at full length, panting and exhausted.
Land! To feel the solid earth beneath him after the nightmare of that
awful journey through the seething waters. Now let the alligators
rage! He had cheated them on their own element.
But had he cheated them? He must not grow careless. The alligators
could travel on land as well as in the water. They were close at hand,
and one or more might come creeping up the bank.
So, tired as he was, he got to his feet and made his way cautiously
inland until he came to a thorn thicket, into which he burrowed, not
without scratches on arms and legs. But what were scratches to one
who had escaped the jaws of the caymans?
Was he on Jaguar Island? Or had he struck a smaller island? Ashati
and Neram had told him of one that stood in the river two miles
above the island of the big cats. Perhaps it was this one on which his
raft had grounded.
He need not wait long to know. The moon would soon be up,
flooding all the world with light. Then he could make a survey of his
surroundings and get his bearings.
In the meantime, rest was unspeakably sweet. The terrific strain
under which he had been during that perilous journey down the river
had tested his strength and endurance to the uttermost. Now he
relaxed.
But he did not sleep. For, if he were not already on Jaguar Island, he
still had a trip to make that night. He had vowed to himself that he
would not sleep until he had reached the island where Japazy dwelt.
Then only would he lie down to slumber.
Perhaps to the slumber that knows no waking! He knew that, too.
But the possibility did not for one moment swerve him from his
purpose.
A little while later a faint light came flickering in among the trees. The
moon was rising. Bomba waited for a few minutes more and then
emerged from his shelter and looked about him.
A little scouting showed him that he was not on Jaguar Island. There
was no semblance of human habitation of any kind. The island was
only a few acres in extent, and in a little while he had walked all
around it.
Once more he would trust himself to the swift turbulent river.
He came to the place where his raft was swinging in the sedge grass
near the shore. His eyes scanned the river anxiously. But there were
no more of those streaks of phosphorescence in evidence. The
alligators had waited for a while perhaps, angry and disappointed,
and then returned sullenly to their usual haunts.
To be sure, others might come and take their places, but as Bomba
knew that the brutes usually slept at night he did not apprehend
much danger on that score.
He unlashed the raft from its mooring and with a hard push of his
paddle sent it out from the shore, where it was promptly caught in
the grip of the current.
Now he was on the last lap of his journey, the journey that had taken
him so many weary days, that had been so full of peril and
adventure, and during which his life had so many times seemed to
depend upon the turning of a hair.
Was not the very fact that he had been so preserved, Bomba asked
himself, a proof that the gods of the Indians, in whom he half
believed, were on his side? Surely he could not have come so far
only to be mocked at last at the very moment when the end of his
mission was in sight.
From these reflections Bomba derived what comfort he could, while
his keen eyes scanned the tumbling waters ahead of him and darted
from shore to shore.
Presently he became conscious of an odd humming sound, as of the
buzzing of innumerable bees. In fact, he thought that a hive might be
swarming from one side of the river to the other, and looked to see if
he could detect the presence of the insects in the moonlight. Then
he remembered that the bees swarmed only in the daytime.
Now the noise took on a deeper note, and with the humming were
mingled discordant notes, rumbling notes, ominous notes, with an
occasional crash as of faraway thunder.
Something like this Bomba had heard on his visit to the Moving
Mountain. At that time they had been a prelude to a frightful
earthquake. Was anything of that kind threatening now?
While he was seeking some solution, his eyes caught sight of a light
on the river ahead of him. He thought at first it might be a torch in the
canoe of some native. But if that had been so, it would have moved
steadily in one direction.
Instead, it leaped about irregularly as though a sport of the wind and
waters. Then it disappeared altogether.
Now other lights, some faint, some bright, began to stud the surface
of the stream. There were many of them, and they flared up and
went out as though at the caprice of a magician. All the time the
humming sound persisted.
Bomba began to feel the hair slowly rising on his head. This
transcended anything in his experience. He recalled the warnings of
Hondura, of Neram and Ashati. Was he entering a realm of spirits, of
malignant ghosts and demons? Were they even now laughing in
glee as they saw the young voyager coming within their reach?
So engrossed was he in these eerie imaginings that for a moment
his vigilant watch of the course he was taking lessened. He was
brought to a rude sense of reality when his raft struck violently on a
rock that protruded above the boiling foam of a rapid, so violently
that it broke apart, the tough withes that bound it snapped by the
force of the impact.
The next moment Bomba found himself struggling in the waters of
the river.
He rose to the surface and shook the spray from his eyes. In the
churning waters he could see the separated logs of the raft tossing
about in wild confusion. He grasped one of them and hung on
desperately until the current carried him and his slender support into
the comparatively quiet waters beyond.
Then he climbed up on the log and sat on it astride.
His mind was a welter of conflicting thoughts and emotions. In a
moment the whole outlook had changed. He had been in
comparative safety as long as the raft was beneath his feet. Now he
was a mere floating derelict, unable to shape his course, powerless
to use his weapons if he were assailed.
The other logs were tossing about in dangerous proximity. At any
moment one of them might be hurled against him, breaking a leg or
knocking him senseless.
And the caymans!
He looked behind him fearfully. But there were none of those
phosphorescent streaks to betray the presence of the monsters.
How long would it be, however, before there would be a break of the
water and the emerging of the hideous head of one of the lords of
the river!
Sitting astride the log, his legs were hanging in the water. One bite of
the alligator’s jaws and a leg would be severed as though shorn by
shears.
But he was nearing land. That was one comfort. Before him in the
moonlight he could see a black mass rapidly taking shape. By its
size and general contour, as given him by the ex-slaves, he
conjectured that it must be the island of the big cats.
He drifted nearer and nearer to it. Now he was not more than a
hundred feet away. Bomba braced himself for the jar that would
come when the log struck the shore. Once more he looked behind.
That look almost made his heart stop beating.
He saw a phosphorescent streak!
 CHAPTER XVII
THE HIDDEN LISTENER

Bomba knew all too well what that phosphorescent streak meant. An
alligator was coming, and coming fast.
Bomba measured the distance between himself and the shore. The
log could move no faster than the current. But Bomba could!
In an instant he had dived into the water and struck out for the shore.
He could swim with amazing speed, and he had never put such
power into his strokes as he did now. He knew that he was racing for
his life. Would the start he had prove sufficient to bring him to the
shore before he was overtaken by his terrible pursuer?
It probably would not have been, if the monster had not stopped for
an instant and nosed about the log. It was there its eyes had last
descried the boy, for Bomba had been swimming under water since
he had slipped off like a shadow.
That moment of puzzlement on the part of the reptile proved the
boy’s salvation. For by the time Bomba’s almost bursting lungs
compelled him to come to the surface for air, he found himself within
a few strokes of the shore.
The alligator detected him and put on a tremendous burst of speed.
But it was under too great a handicap. Bomba reached the bank and
pulled himself up just as the alligator made a snap at him and
missed.
Bomba rose to his feet, his heart swelling with jubilation.
But that jubilation was swiftly turned to horror.
As he drew the air into his gasping lungs and turned from the shore,
there came a tremendous roar and the lad found himself looking into
the fiery eyes of a jaguar crouched for a spring.
There was no time to fit an arrow to the bow, not even time to draw
the machete from its sheath, for even as Bomba’s startled mind
grasped the situation, the beast launched itself into the air.
Like a flash Bomba dropped flat to the ground.
He felt the rush of air as the brute passed over him. The next instant
Bomba was on his feet and had drawn his knife, ready for the return
attack.
But there was no need. They had been so close to the bank that the
spring of the brute had carried it over the edge and into the water. It
came up sputtering and strangling and started to scramble up the
bank.
Then came a rush, a scream of mortal agony, and the jaguar was
struggling in the jaws of the alligator!
The great beast fought desperately, tearing with teeth and claws
against the scaly hide of its captor. But the alligator was in its favorite
element and had the advantage. Clamping the jaguar in its great
jaws, it went down under the surface. There was a churning of the
water that rapidly turned red, a few bubbles of air rose to the top,
and then the commotion subsided.
The lord of the jungle had met more than his match in the lord of the
river!
Scarcely daring to believe in his escape, Bomba watched the
turbulent water in a horrid fascination. Two terrible perils, one from
the land, one from the water, had vanished almost in the twinkling of
an eye.
He had reached his destination. He was on Jaguar Island. He was
unscathed. Surely the Indians’ gods—or some power higher than his
own—must be on his side when one of his enemies was made to
destroy the other. The conviction gave him renewed strength and
courage.
He found a thorn thicket, forced his way into it, and sat down to take
counsel with himself as to his future course.
He had formed no clear idea as yet as to how he would approach
Japazy. He had deferred thinking of that until he should have
reached the island.
One thing was certain. He must not seek him at night. In the
darkness and the confusion that his unexpected coming might
produce it might very well happen that he would be killed before his
peaceful intentions could be explained. It was the law of the jungle to
shoot first and investigate afterward.
No, he must go in the daylight, with his palms extended outward as a
sign of amity and goodwill. Then he would be brought into Japazy’s
presence and would explain his errand. Then he would listen to the
words that would give him the information for which his soul yearned
or else doom him once more to heartache and despair.
He looked at the sky and judged the time from the position of the
moon. It was not yet midnight. He would have some hours in which
to get the rest that he so sorely needed. Then at the first streak of
dawn he would be astir, would go scouting cautiously about the
island and find out the dwelling place of Japazy and his people. After
that he could decide how to approach the half-breed.
The mysterious humming mixed with louder and more discordant
notes still persisted. Bomba glanced riverward and saw the flickering
lights dancing weirdly on the surface. What did they mean? What did
they forebode?
He looked about the jungle. In the faint moonlight that filtered
through the trees the things he saw took on fantastic shapes. The
creepers hanging from the trees swayed and writhed and seemed to
stretch out ghostly arms. The knots and boles of the trunks framed
themselves into grimacing faces that seemed to be chuckling over
the fate of the young invader who had come unbidden into their
realm.
With an effort Bomba shook himself free from the morbid fancies that
were stealing upon him.
“Is Bomba an old woman?” he asked himself scornfully. “Will he be
whimpering soon like Pipina, the squaw? No! Bomba does not fear
what the natives fear. He does not tremble like Ashati and Neram
who talk foolish words about ghosts and demons. For Bomba is
white. He is like Gillis and Dorn, who laugh at the talk of ghosts. If
they can laugh, so can Bomba. For Bomba has a white skin and he
has a white soul, and he is afraid of nothing that the foolish people
say walk in the darkness.”
Strengthened in his own mind by this defiance, he took food from his
pouch and made a hearty meal. Then he burrowed still further into
the heart of the thicket, where, knowing that no wild beast would
attempt to get at him, he lay down and slept.
The first faint light of day was creeping up the sky when he awoke.
He made a hasty breakfast, and then, after looking closely to the
condition of his weapons, set out on his voyage of discovery.
It was not long before he discovered that the island was many acres
in extent. Much of it was jungle, almost as thick in places as on the
mainland. But it was much easier to traverse, for there were
numerous well-beaten trails extending in various directions which
attested the presence of quite an island population.
There were sections also on which grew little vegetation. These were
sandy and rocky plateaus, seamed with ravines. There was one
great hill that almost rose to the dignity of a mountain, and from this
a bluish vapor or smoke kept constantly rising and spreading out in
the shape of a fan. At times a flash of flame would issue forth from
the summit.
In the vicinity of this, Bomba frequently felt slight tremors of the
earth, one of them so pronounced that it nearly threw him from his
feet. And the humming was much louder here than it had been when
Bomba was on the river.
Bomba knew that he was in a volcanic region, and the discovery did
not contribute to his peace of mind. The terrible scenes that had
attended the eruption of the Moving Mountain and the earthquake
that had accompanied it were still too fresh in his memory not to stir
him unpleasantly in retrospect.
At almost every moment Bomba expected to come upon some hut or
village in the jungle. From the inhabitants of these, he had planned
to get information as to the village or town in which Japazy dwelt. But
though he saw once in a while some ramshackle cabin, it proved
invariably to be deserted. In some places the lush vegetation of the
jungle had almost overgrown the hut. No beaten path led to the door.
Not the rudest of native furniture was within.
After two or three experiences of this kind Bomba grasped the
situation. The jaguars that had given the island its name must
abound in such numbers that no solitary dweller in the jungle would
be safe. Probably every one of these deserted cabins had been the
scene of a tragedy. Undoubtedly the inhabitants had had to gather
into one town for mutual protection.
Bomba thanked his stars that it was daylight and that most of the
nocturnal prowlers had retired to their dens where they would sleep
the day away in preparation for the next foray. But all the same,
there might be one or more about, and he kept a vigilant eye upon
every tree and thicket.
He had searched about for perhaps three hours when he heard the
twang of a bow string. With it was blended a roar of rage and pain.
Then followed an excited babbling of voices.
The sound had come from the further side of a group of rocks that
seemed to have been thrown about in confusion by some convulsion
of nature. They were not more than fifty yards away.
With the speed and at the same time the stealthiness of a panther,
Bomba glided to the biggest group of bowlders. He squeezed himself
in a crevice between two of them.
Now he could hear the voices of two natives talking vociferously.
 CHAPTER XVIII
DISCOVERED

Bomba edged himself still further between the bowlders until he

found a place where he could look through without himself being
seen.
At once he saw the reason of the excitement.
A dead jaguar lay stretched out on the ground. One arrow protruded
from its side. Another was imbedded in its throat.
Two natives were inspecting it and gloating over their kill. They were
vigorous and stalwart specimens, somewhat above the usual size of
jungle dwellers. Their faces were savage, but not so brutish as those
of the headhunters of Nascanora. They were unclothed, save for the
customary breech clout. On their broad breasts was painted a tribal
emblem that Bomba had never seen, and a band about the forehead
of each held a cluster of nodding plumes.
While the language in which they spoke had some words that were
unfamiliar to Bomba, he was so well versed in most of the dialects of
the jungle, which differ little, that he had no trouble in understanding
what they were saying.
“The aim of Sunka is true,” boasted one, as he bent over the dead
beast and proceeded, with the aid of his knife to get the arrow from
its throat.
“No truer than that of Boshot,” retorted the other, as he sought to
reclaim his arrow from the body. “See how it went through from side
to side!”
“The jaguar is brave, but he is not so brave as the fighting men of
Japazy,” went on Sunka, as he examined his arrow, dried it and
returned it to his quiver.
“His leap is as the lightning, but when the arrow sings he falls,”
added Boshot. “I see Olura, Tama and Abino coming,” he went on,
as he looked toward a trail at his right.
“They have heard the jaguar roar and they come to help,” declared
Sunka. “But there is no need of help when Sunka and Boshot have
fitted their arrows to the string.”
It was in this self-congratulatory mood that the victors welcomed the
three newcomers whom Bomba could now see issuing from the
jungle path.
There were loud cries of satisfaction as the trio discovered the dead
body of the jaguar.
“Japazy will be glad when he sees its head!” exclaimed Olura, as he
surveyed the animal.
“Whose arrow killed it?” asked Tama.
“Mine,” declared Sunka proudly.
“Mine,” stated Boshot with equal conviction.
They glared at each other in defiance, and their hands involuntarily
gripped more tightly the spears that they carried in addition to their
bows and arrows.
“There is no need of bad blood and hot words between Sunka and
Boshot,” intervened Abino, who seemed to be much older than the
others and something of a diplomat. “All Japazy’s people know how
brave they are. What matter which arrow did the killing? Neither
might have done so without the other. Japazy will be pleased with
Sunka and Boshot. But his eyes will shoot lightning at either one, if
he fight with the other.”
“That is true,” put in Tama. “There are too few of our people now
since the plague came some moons ago. That plague carried many
to the place of the dead. The tribe needs all its fighting men to kill
jaguars and not to kill each other.”
The hands of the would-be combatants loosened from their spears
and their anger disappeared. Bomba guessed that the most potent
argument had been the mention of the lightning that would flash from
Japazy’s eyes. It was evident from the reverence with which they
pronounced the name of the chief that they held him in awe.
“The jaguar is dead, and that is good,” said Abino. “But there are still
many left. We kill many, but more come. And there are cubs in the
caves that will soon be big enough to carry off the children of the
tribe.”
“Yes,” agreed Olura, with despondency in his tone. “Two more were
carried off last week. The medicine men make prayers, but still the
jaguars come.”
“They come from the other shore,” observed Abino. “They swim the
river in the night when the caymans are asleep. There are herbs on
the island that they like, that make them laugh when they are sad,
that make them well when they are sick.”
Bomba guessed that they referred to a kind of catnip that he had
already noted growing on the island in great profusion. He wondered
that the natives had not torn these up by the roots, so as to make the
place less alluring to the unwelcome visitors. Then, realizing the rank
and rapid growth of the vegetation, he knew that nothing less than
an army could accomplish the colossal task.
“It would be well if Japazy would take his people to the other side of
the river where the jaguars are not so many and where the tribe
could dwell in peace,” remarked Boshot.
“Beware, Boshot,” warned Abino, looking fearfully about him.
“Remember you not Manasta, he of the bold and forward tongue?
He said one day to Japazy the words that just now came from
Boshot’s mouth. Japazy looked at him and his frown was terrible.
And Manasta has not been seen since that day.”
“That is true,” put in Tama, in an awed voice. “It is said that Japazy
had him tied and put in a bag and thrown into the river to the
caymans. So beware, Boshot. They are good words that Abino has
spoken to Boshot.”
The doughty warrior, who had not quailed before the charge of the
jaguar, seemed to shrink into himself, and Bomba had a new glimpse
into the ruthless character with whom he was soon to deal.
“Now let us skin the jaguar and get his meat,” suggested Olura.
“There is but little food in the huts of our people, and they will be glad
and make a feast when they see us bringing them the meat of the
jaguar.”
They were preparing to carry out the suggestion when there was a
sharp report. A burst of flame sprang out of the mountain’s top, and
the earth shook so violently that all of the natives measured their
length upon the ground. Bomba would have been thrown also, had it
not been for the rocks on either side. As it was, he was knocked
about until he was bruised and sore.
The natives scrambled to their knees and bowed their heads to the
ground, making cabalistic signs and uttering entreaties either to the
mountain or their gods.
The trembling of the earth persisted for several minutes and then
subsided. But it was some time before the natives had so far
recovered from their fright as to set about resuming the skinning and
cutting up of the dead jaguar.
“Tamura is angry,” murmured Abino, looking up fearfully at the
mountain peak, from which smoke and flame were still issuing. “We
must make him gifts, many gifts, so that he may smile again upon
our people.”
“We will give some of this meat to the medicine man so that he may
make a burnt offering,” suggested Tama. “Else the lava floods may
come and roll over the dwelling place of the tribe.”
As though to accentuate this possibility, there came another shock
more violent than the one before.
The rocks between which Bomba was standing were pulled apart as
though by giant hands, and to the startled eyes of the Indians Bomba
stood revealed!