SUPPLY AND DEMAND 
81 
got out of them, nevertheless, would almost 
certainly be counteracted by losses in other 
directions, due to the fact that the firm be 
came too large to be effectively directed and 
properly controlled by the one employer, or 
the one Board of Directors. Delegation of 
authority, implying the creation of depart 
mental responsibility, might for a time prevent 
any serious rise in the cost of production with 
increased growth ; but a limit is to be ex 
pected, though a wider examination of human 
nature and of the industrial system than can 
be attempted here would be required fully to 
justify this conclusion. We may take it, 
then, that there comes a time when marginal 
costs begin to rise, because there comes a 
time when the business attains dimensions 
too vast for the strength of its central organs. 
The question to put to ourselves at 
this particular stage of our discussion 
may be phrased thus : At what point is it 
decided to attempt no further extensions ? 
The notion of marginal expense having been 
brought in, this question is not a puzzling 
one. We may take it for granted that a 
small extension of a firm’s output does not 
add appreciably to the employer’s work. 
Consequently it pays the employer to allow 
his business to grow until his marginal