Here the conception of the margin enables us to grapple with a problem which would otherwise be insoluble.  For, while it is impossible to separate out the total utility and cost of wool, it is not impossible to disentangle its marginal utility and its marginal cost.  The proportion in which wool and mutton are supplied cannot be radically transformed; but it can be varied within certain limits, by rearing, for instance, a different breed of sheep.  Variations of this kind have been an important feature of the economic history of Australasia, where sheep farming is the leading industry.  Before the days of cold storage, Australia and New Zealand could not export their mutton to European markets, though they could export their wool.  Wool was accordingly much the most valuable product; the mutton was sold in the home markets, where, the supply being very plentiful, the price was very low.  In the circumstances, the Australasian farmers naturally concentrated on breeding a variety of sheep whose wool-yielding were superior to their mutton-yielding qualities.  The development of the arts of refrigeration led in the eighties to an important change.  It became possible to obtain relatively high prices for frozen mutton in overseas markets.  There was, therefore, a marked tendency, especially in New Zealand, to substitute, for the merino, the crossbred sheep which yields a larger quantity of mutton and a smaller quantity of wool of poorer quality.  Now if we calculate the cost of maintaining the number of merino sheep which will yield a given quantity of wool, and calculate the cost of maintaining the larger number of crossbred sheep which will be required to yield the same quantity of wool (allowing for differences of quality) the extra cost which would be incurred in the latter case must be attributed entirely to the extra 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, L10, 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.