SUPPLY AND DEMAND 
77 
of the thing produced by the person whose 
consequent disbursement makes the price that 
we are studying. 
The theory of which the presentment is 
now finished, concerning the determination of 
the prices of things, is unquestionably sound 
in substance and moreover sufficient as a 
rough working engine. But it will not do, 
in the form in which it has been presented, as 
a final account of the matter. It is incom 
plete. It ascribes the settlement of the price 
of a reproducible thing to tendencies for 
demand price on the one hand, and the 
average cost of production (meaning cost of 
production per unit of output) of the marginal 
firm on the other hand, to attain equivalence : 
but it leaves unexplained the position of the 
margin so conceived and the determination of 
the output of the marginal firm which helps 
to settle its average cost of production. Why, 
for example, in the case of the braid industry, 
taken at the beginning of this chapter, should 
there be four firms producing braid ? Why 
not three firms, each firm producing more, so 
that the marginal firm would be the third in 
efficiency instead of the fourth ? In this 
event, there being greater efficiency in the 
marginal firm presumably, would not mar-