ORGANIZATION OF THE FARM 



how many composite units, composed of laborers 

 and capital-goods should be associated with an 

 acre of land? For the purposes of this illustra- 

 tion let us assume a small composite unit, the use 

 of which costs the farmer one dollar. It is obvi- 

 ous that in the production of maize, for example, 

 the application of one of these units, per acre of 

 land, would ordinarily produce very little, if any 

 maize at all. It is possible that the expenditure 

 of two units would produce a small crop ; but then 

 the third unit would increase the product more 

 than the second, the fourth more than the third, 

 and so on until a point of stationary returns has 

 been reached, after which the succeeding units 

 may be said to continue for a time to add less and 

 less to the total product, until a point may be 

 reached where further applications would add 

 nothing to the total product. Thus in agricultural 

 production the returns to succeeding composite 

 units made up of laborers and capital-goods, may 

 be said to follow the law of increasing returns 

 until a point of stationary returns has been reached, 

 after which the law of diminishing returns per 

 succeeding unit commences to operate. 



This may be illustrated by means of a diagram. 

 In Fig. i the composite units of labor and capital- 

 goods applied to a given acre of land are measured 

 on the line A B f commencing at A. The line A I' 

 B represents the increasing and diminishing re- 

 turns per succeeding unit. Having in mind land 

 7 97 



