86 
POLITICAL ECONOMY 
theory, in an exaggerated long run it is the 
marginal cost of every producer, as it is the 
marginal demand of every consumer, which 
settles price. 
But there is a difficulty in our new view. 
Does abstract theory hold with such precision 
of the facts on the side of supply as of the | 
facts on the side of demand? The latter 
may be co-ordinated in systems as non- 
viscous as water but the former in systems as 
viscous as tepid tar. Before he has made 
any tests an employer cannot accurately 
guess at what is the most economical size 
of business for him to aim at, and once 
businesses are established their elasticity may 
be checked by cramped space in their premises 
and in the vicinity and the limited horse 
power of the engines originally installed. 
Again, though it may be worth while to 
attempt a large expansion, the trouble of 
making a little expansion may quite outweigh 
the gains. Moreover it is indubitable that a 
certain size of business is likely to become 
typical of certain industries despite the 
differences between employers in respect of 
capacity. Consequently we cannot allege 
that the tendency for the marginal cost of a 
firm to equal price will be as a rule triumphant. 
In numerous instances it may be indefinitely