ORGANIZATION OF THE AGRICULTURAL ENTERPRISE 321 



The difference between these two laws can be expressed in a more 

 compact form by means of the following formulae, which are not to 

 be understood as in any sense proving the existence of the laws, but 

 only as expressing them in convenient form. 



i Ji 



=: ~j 



8 S'S 3 



a a fi 



< t> 



I. If X with Y will produce . .P, 



TT ^, ., , ,, . , I more than aP (increasing returns) 

 II. then X with aY will produce <, _ ,,. . . , . ' 



{ less than aP (diminishing returns) 



( (Increasing economy of 



TTT A v - v . , f m rethanaP \ large-scale production) 

 III. and aX with aY will produce < ;._. . . ,. 



lless than oP J (Diminishing economy 

 Ipf large-scale production) 



It is assumed that a is a positive quantity greater than i. 



In formula II, it will be observed, the proportion in which the 

 factors are combined is not the same as in formula I, land remaining 

 the same while labor and capital are increased by a. In formula III, 

 however, the proportion is the same as in I, all the factors being 

 increased in the same proportion; but the size of the whole combina- 

 tion is increased. 



For the present we are concerned only with the law of diminishing 

 returns, whose expression is: 



]i ||.i | 



1. If X with Y will produce P, 



2. then X with aY will produce more than P, but less than aP. 



This, as was shown in the earlier part of this chapter, is the con- 

 dition which exists wherever men find it to their advantage to extend 

 their cultivation to any but their best land. 



Leaving out of account the increasing or decreasing economy of 

 large-scale production, we may add the following: 



^TJ 



i si -i 



o a 



&J2S 



3. aX with aY will produce aP; since this reproduces the same pro- 

 portion between labor and capital on the one hand and land on the other as was 

 given in formula i. Comparing 2 and 3, it is evident that, labor and capital 

 remaining fixed, a variation in the land expressed by the ratio aX : X, will produce 

 a variation in the product expressed by the ratio aP : a quantity greater than P 

 but less than aP. 



