294 PRINCIPLES OF RURAL ECONOMICS 



would pay for the services of the second man. Since two men 

 produce, in this case, only $600 more than one man, two men 

 are obviously worth $600 more than one man. If, however, 

 wages in the community are only $400 per year 1 or for the 

 farming season, it would certainly pay the farmer to hire a 

 second man, if a second man is to be had, since he would 

 make -$200 by the process. 



Such a large profit as this would lead him to consider whether 

 it might not pay him to hire a third man also. Now suppose 

 that three men on the same farm could produce $2000 on the 

 average and in the long run. This gives a marginal product, 

 under the terms of the illustration, of exactly $400 ; that is, the 

 third man adds $400 to the product over and above what two 

 men could produce. If, as we have assumed, $400 is also the 

 cost of the third man to the employer, it is a matter of indiffer- 

 ence to the latter whether two men or three men are employed, 

 since he neither gains nor loses by the employment of the third. 

 If, however, the marginal product were even one dollar greater 

 than the cost of the third laborer, it would pay the farmer to hire 

 the third man, though the profit would be only one dollar. 



Now suppose that in the country, generally, there were so few 

 laborers that, in a normal distribution, there were only two for 

 every such farm as the one we are considering, the tendency 

 would be for wages to be fixed at $600, or the marginal product 

 of labor. If the wages were more than $600, every farmer who 

 knew his business would dispense with one man. This would 

 leave a good many of the existing supply of men out of work, 

 and they would begin to offer td work for less. If wages were 

 less than $600, then every farmer who knew his business would 

 want to hire an extra man, and every man would be employed. 

 If wages were very much less than $600, then a good many 



1 Under wages are included everything which the laborer receives for his 

 work, including board, lodging, washing, and other privileges. 



