d of Normal Price._--It is commonly and correctly
stated that the normal price of anything is that which just covers the
cost of producing it. Cost in this case is the total amount of money
that the _entrepreneur_ pays out in order to bring the commodity into
existence. He buys raw materials and pays for all the labor and
capital that transform them into a new and saleable shape. If he can
make a net profit, he does so; but competition tends to adjust the
quantity produced and the consequent price in such a way that he can
make no net profit. What he gets for the article will then reimburse
him for his total outlay, but it will do no more. Since the quantity
produced is normal when it brings the market price to this level of
cost, it appears that the cost is the ultimate standard in the case.
The quantity supplied varies till it causes the market price just to
cover the cost; and so long as the quantity supplied is thus natural,
other influences remaining the same, the price is so. This states the
cost of production in terms of money paid by an _entrepreneur_ and the
returns from the operation as money received by him; but there is a
more philosophical way of conceiving the law of cost, and to this we
shall soon recur.

_Elements of Cost._--Whatever the _entrepreneur_ has to pay for in the
production of an article is of course an element in its monetary cost
to him. If he does not begin the making of it by drawing his raw
materials from what nature freely furnishes, he must pay some one for
the raw material. He must also pay for the labor, and this is
equivalent to buying the fraction of the article that is produced by
labor; for the laborer, as we have seen, is the producer of a certain
fractional share of the article and the natural owner of that share,
and when he agrees to let his labor for hire, what he really does is
to sell out his individual interest in the forthcoming product of the
industry in which he is about to engage. When a workman in a shoe
factory agrees to work for two dollars and a half a day, he really
contracts to sell every day for that amount a certain quantity of
shoes. The leather is one element which enters into the finished
shoes, and therefore the entire shoe is not really made in the
factory; but of the part which is there made, namely, the utility that
results from transforming the leather into shoes, one part is made by
labor and another by capital. The _entrepreneur_ has to buy both of
t