76 
POLITICAL ECONOMY 
foregoing that the way to get larger supplies 
when increasing returns rules is to offer lower 
prices—which seems absurd and is absurd. 
Larger outputs are always induced by higher 
and never by lower prices. The explanation 
of the seeming absurdity is this, that when 
price has risen, and a larger output is got, 
price will begin to subside until a level lower 
than the old is reached. Our generalisations 
relate, not to immediate consequences, nor 
to such as appear soon, but to the con 
sequences which, other things being equal, 
must be brought about in the long period. 
The exact scientific implications of the long 
period have been laid bare in our first chapter. 
This will be the most suitable break in our 
exposition to introduce a qualifying idea, 
relating to all the foregoing and much that 
follows, an idea which has hitherto been 
reserved in order to avoid, in the first instance, 
a certain complication in the theory of price. 
The idea, which needs only to be stated to be 
admitted, is that cost of selling, as well as 
cost of producing proper, governs price. 
When therefore I speak of cost of production, 
in relation to the settlement of supply prices, 
I must be taken to include in production 
all those processes, whether industrial or com 
mercial, which are antecedent to the receipt