THE GRADES OF THE FACTORS OF PRODUCTION 117 



exists likewise in the human factor. There is a very wide range 

 of differences in men with respect to the amounts of land, labor, 

 and capital they can operate. High capacity is not always a 

 desirable quality. For example, certain land requires much 

 more power to plow and more work with the pulverizer and 

 harrow to put it in condition for planting seeds, yet does not 

 produce extra large crops per acre. The labor of milking some 

 cows is twice as great as that required in milking others, and 

 they do not necessarily produce any more milk. Capacity, 

 or the power to absorb the other factors, implies nothing as to 

 usefulness of a factor in cases of this kind unless taken in con- 

 junction with efficiency. 



Efficiency is defined as a ratio between the energy put in 

 and the results secured. The efficiency of a factor of produc- 

 tion is measured in terms of the value of the product per unit 

 of the other factors (of given grades of efficiency) when as- 

 sociated in the most profitable proportions. To illustrate, 

 two pieces of land may yield widely different results per hour 

 of man and horse labor expended upon them by the same man. 

 Two cows may vary widely in the amount of butter fat they 

 yield per pound of feed consumed when the two cows are fed 

 by the same man upon the same feeds. 



The relation of capacity, efficiency, and productivity are 

 easily understood. The productivity of a physical unit of an 

 instrument of production, as an acre of land or a cow, is the 

 resultant of capacity and efficiency. The product divided by 

 the capacity equals the efficiency. In other words, capacity 

 relates to " input " ; efficiency to " output " per unit of " in- 

 put " ; and productivity relates to the total product per acre 

 of land, per cow, or per man. The calculation of efficiency 

 may be made in terms of physical product or in terms of the 

 value of the product. In analyzing the productivity of cows 

 and other movable instruments of production, physical produc- 

 tivity is often the better basis of comparison because of differ- 

 ences in values at different locations. In the case of immovable 

 instruments of production the value of the product is the more 

 satisfactory basis of comparison. 



