THE PROPORTIONS OF THE FACTORS OF PRODUCTION 139 



sented by line AX'P (Fig. 7), which is so drawn that it will 

 pass through the upper right-hand corner of any rectangle which 

 has AC, AD, AE, etc., or any part thereof, as a base and which 

 incloses an area equal to the area AC'C, AD'D, AE'E, etc., 

 respectively, as rectangles AWN I and AV X' X have been 

 drawn in Fig. 7. 



As illustrated in Fig. 7, the curve of averages reaches the 

 highest point at X' and the highest average product per unit 

 is gained by employing seven and two-fifths units per acre, 

 and it will be seen at once that, since all the charges which must 

 be deducted are a fixed amount per composite unit of labor and 

 capital-goods applied, the higher the average return per unit, 

 the greater will be the farmer's net profit per composite unit, 

 and under the assumption that, in the production of a given 

 crop, the same amount of managerial activity is required per 

 composite unit without regard to the area of the land on which 

 it is employed, and when there is no rent to pay, the applica- 

 tions should increase until the point of maximum average re- 

 turns per unit is reached. This is the most extensive agricul- 

 ture that is consistent with the greatest net profit to the farmer 

 under any circumstances, in the production of a given crop; 

 and, under the above assumption as to demands upon managerial 

 activity, it is the most intensive that is in accord with the 

 farmer's highest economic interest, where the use of land may 

 be had free. 



It has been said J that the intensity of culture should be in- 

 creased until the final increment adds no more to the total 

 product than enough to cover the cost of that unit. If, in Fig. 

 7, for example, the value of the product represented by a rect- 

 angle whose sides are KL and LL' equals the cost of securing 

 the use of a composite unit, the applications should, according 

 to this view, be increased just to point L. It is true that this 

 would enable the farmer to secure the largest net profit per acre 

 of land, but unless he be a marginal farmer, in which case the 

 two statements coincide, it would reduce his net profit per 

 composite unit of the other factors. If the farmer were able 



1 T. N. Carver, " The Distribution of Wealth," p. 80. 



