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  incomplete. ­
  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-