64 
POLITICAL ECONOMY 
the cost of production of one firm will be identi 
cal with that of another, because all employers 
do not possess the same ability and applica 
tion, workmen are not indistinguishable from 
one another in respect of capacity, and there 
are differences as regards productive value 
between the several units of other agents in 
production. The business which has the 
misfortune to function with the highest cost 
of production is known, as we have seen, as 
the marginal business, or business of marginal 
quality. 
With a view to trimming the ragged edges of 
our ideas, let us take a particular case. Let 
us imagine an industry engaged in the manu 
facture of some kind of braid. Let there be 
four firms, A, B, C, D, and let their costs 
of production per yard of braid be 6d., 7d., 
6&d., and 6|d. respectively. Then B is called 
the marginal firm because it has the highest 
cost of production, namely, 7d. Let us 
imagine that the output of the four firms taken 
together is 100,000 yards of braid per year 
Then, if 100,000 yards are to be sold, the 
price must be at least 7d., because, if it were 
not, it would not pay the firm B to produce. 
In its cost of production of 7d. we have in 
cluded adequate remuneration for all the 
factors in production, including the employer.