SUPPLY AND DEMAND 
85 
render the functioning of the industry as a 
whole not merely more economical but more 
economical to such an extent that the new 
marginal cost of a business would be beneath its 
old marginal cost. To admit this qualification 
is simply to admit that industries may be 
subject to increasing returns. 
The significance of the theory of supply as 
thus refined may have already dawned upon 
the reader. It involves us, as it now stands, 
in the conclusion that by the supply price 
of a given output of an industry we ought 
logically to mean in highly abstract theory 
the marginal expense entailed in the several 
businesses of the industry when such an 
output is aimed at. Of course this marginal 
expense comes to the same thing as the cost 
of the marginal firm per unit of output under 
the assumed conditions. This follows as a 
corollary from the above reasoning. Our 
new view results from a thorough and unre 
served application of the marginal method to 
supply. My marginal demand and the mar 
ginal demand of every other purchaser equally 
settle price on the side of demand, according 
to finished theory. We have drawn from 
industrial experience by close analysis that 
a corresponding assertion can be made as 
regards supply ; that, according to strict