78 
POLITICAL ECONOMY 
ginal cost be lower ? In the theory, as we 
have put it, no answer is found to these 
questions ; demonstrably, then, the theory is 
leaky. To answer these questions must be 
our next task if our aim is completeness of 
theory. 
Our primary objective must be to bring to 
light the influences governing the sizes of 
businesses or firms. We shall take for study 
a firm which is not cramped for want of 
capital and which can obtain all the orders 
that it is capable of carrying out at a suffi 
ciently low cost. Let us try to imagine how 
the employer at the head of such a firm would 
be determined in laying down the limits of 
his business Though many firms are not 
organised on a private basis, but have been 
constructed as companies, or transformed 
into companies, or organised in the co-opera 
tive form, I speak of the “ employer ” at 
the head of the business, because the more 
complicated types of business organisation 
introduce no new elements which affect the 
character of the problem with which we are 
concerned, and it is a convenience to speak 
as if every business functioned under the 
direction or control of a single employer. 
The first thing to which attention must be 
summoned is the way in which the employer’s