The next thing that happens is an improvement made by _a_, causing his cost of production to fall below that of _b_. The resulting fall in price now finally drives _e_ out of business; he can no longer earn anything at all on his fixed plant. We may assume that producers _a_, _b_, and _c_, who have been making profits, have enlarged their productive capacity enough to supply the market fully without _e_'s contribution. _d_ is now in the same position in which _e_ was at the preceding stage,--earning nothing on his fixed establishment and barely induced to remain in the business. The next occurrence represented is the opening of a new, large, and very efficient mill by _f_. The effect is like that of improvements, but more violent. The fall in price drives both _d_ and _c_ out of business. _b_ is now on the margin, but saves himself from loss by a second improvement, which makes him again the most efficient producer. And so the process goes on _ad infinitum_. This figure illustrates the fact that, while at any time the price of a good roughly equals the cost of it to the least efficient producers, still this cost does not _govern_ the price. The ruling factor is the cost in the most efficient mill, toward which the price tends; and all that the cost in the least efficient mill determines is how long that mill shall continue running. In order that the claim here made--that price equals cost in the establishment which is about to be crowded out of the field--may hold good it is necessary to define terms with some care. In a typical case an employer who is destined soon to close out his business has, perhaps, an antiquated mill, which itself pays nothing, but enables its owner to use circulating capital and labor in a way that affords interest on that capital and wages for the labor. No interest on the cost of the antiquated mill is chargeable to the business unless the site and the building can be sold for a new purpose. If they have completely lost all productive power, they are not, as we use terms, capital goods at all; and in that case the only interest which the _entrepreneur_ should reckon as a cost is that which accrues on other capital used in connection with the worthless mill. If the site and the building have some value for another purpose, and if the machinery has some value as junk, then whatever the owner can get by disposing of the plant constitutes a sum the interest on which constitutes a cost of producing goods in this mill. It is a sum which the plant owner foregoes as long as he refrains from selling the plant. He can afford to use it in production as long as the price of the product covers the cost as thus defined, but must stop when it ceases to do so.