If the baker refuses to sell at the lower price, then that is now his cost. Costs are forgone alternatives and always involve choice. Once the alternative has been sacrificed it no longer has any 'influence on price'. Money costs to the entrepreneur only equal opportunity costs when he plans the investment. Once his money costs are ' sunk' they must be considered irretrievable spent.
Bygones are always bygones.
Our definition of cost now brings us to his peculiar view that labour has become a fixed cost that breaks the link between costs and price. However, it has already been demonstrated that Legge has no understanding of value, the nature of cost or price determination, and his casual treatment of so-called fixed costs only serves to underline his ignorance. Costs are not fixed by some mysterious force but are determined by the total entrepreneurial demand for factors of production which in turn is driven by consumer preferences. However, he is not alone in falling prey to this particular fallacy of composition. Legge also uses the neoclassical short run approach in his treatment of cost.