mutton that would be obtained. This extra cost we can regard as
constituting the marginal cost of mutton. So long as this marginal
cost falls short of the price of mutton, it will be profitable to
extend further the substitution of crossbred for merino sheep. The
process of substitution will in fact be continued until we reach the
point at which the marginal cost is about equal to the price.
Similarly by starting with the numbers of merino and crossbred
sheep which would yield the same quantity of mutton, we can calculate
the marginal cost of wool; and again the tendency will be for this
marginal cost to be equal to the price.[1]

[Footnote 1: It may be found difficult to grasp this point when stated
in general terms. The following arithmetical example may make it
plainer:--

Suppose a merino sheep yields 9 units of mutton and 10 units of wool.

Suppose a crossbred sheep yields 10 units of mutton and 8 units of
wool.

Suppose, further, that a merino sheep and a crossbred sheep each cost
the same sum, say, for convenience, £10, to rear and maintain; and
that there are no special costs assignable to the wool and the mutton
respectively, as, of course, in fact there are.

Then 10 merino sheep, yielding 90 units of mutton + 100 units of wool,
cost £100; while 9 crossbred sheep, yielding 90 units of mutton + 72
units of wool, cost £90.

Hence you could obtain an extra 28 units of wool for an extra cost of