SUPPLY  AND  DEMAND

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got  out  of  them,  nevertheless,  would  almost
certainly  be  counteracted  by  losses  in  other
directions,  due  to  the  fact  that  the  firm  became ­
  too  large  to  be  effectively  directed  and
properly  controlled  by  the  one  employer,  or
the  one  Board  of  Directors.  Delegation  of
authority,  implying  the  creation  of  departmental ­
  responsibility,  might  for  a  time  prevent
any  serious  rise  in  the  cost  of  production  with
increased  growth  ;  but  a  limit  is  to  be  expected, ­
  though  a  wider  examination  of  human
nature  and  of  the  industrial  system  than  can
be  attempted  here  would  be  required  fully  to
justify  this  conclusion.  We  may  take  it,
then,  that  there  comes  a  time  when  marginal
costs  begin  to  rise,  because  there  comes  a
time  when  the  business  attains  dimensions
too  vast  for  the  strength  of  its  central  organs.
The  question  to  put  to  ourselves  at
this  particular  stage  of  our  discussion
may  be  phrased  thus  :  At  what  point  is  it
decided  to  attempt  no  further  extensions  ?
The  notion  of  marginal  expense  having  been
brought  in,  this  question  is  not  a  puzzling
one.  We  may  take  it  for  granted  that  a
small  extension  of  a  firm’s  output  does  not
add  appreciably  to  the  employer’s  work.
Consequently  it  pays  the  employer  to  allow
his  business  to  grow  until  his  marginal