Cost of production and normal supply price

Schedules of normal supply prices of specific goods are schedules of expenses and not of real costs. In terms of expenses, marginal has no significant meaning in a period of equilibrium. Consequently, the doctrine that normal price tends to equal marginal cost of production is not valid if applied to particular commodities. In current value theory, normal supply schedules are constructed in monetary terms and then, in order to identify the marginal unit, a transition is made to schedules of real cost. This is an untenable procedure and results in an unsound theory of normal price for particular commodities, and an obscuring of the role of accounting cost in the process of value determination. Consistent analysis would indicate that the equilibrium price of specific commodities tends to equal average expenses of production. Accounting cost influences disequilibrium price through its effect upon the magnitude of marginal expenses.