322 AGRICULTURAL ECONOMICS 



It appears that the product does not bear a constant ratio either 

 to the labor and capital, or to the land. When the amount of land is 

 left unchanged and the amount of labor and capital is increased, the 

 product does not remain unchanged, nor does it increase as much as 

 the labor and capital. And if the amount of labor and capital were 

 to remain unchanged while the amount of land were increased, the 

 product would neither remain unchanged, nor would it increase so 

 much as the land. From the above formula we may therefore derive 

 the following: 



III | 



If X with Y "will produce P, 



IV. then aX with Y will produce more than P, ' but less than aP. 



Thus the law of diminishing returns, originally applied to the product 

 of a given amount of land under varying applications of labor and 

 capital, is capable of being reversed and applied to the product of a 

 given amount of labor and capital when applied to varying amounts 

 of land. The principle is the same, and the expression similar in both 

 cases. 



But the principle can be still further extended by separating labor 

 and capital and representing them as two factors, instead of lumping 

 them together, as has been done thus far in the discussion. Indeed, 

 there is every reason for so separating them, for labor and capital 

 do not belong in the same class. They are no more alike than are 

 labor and land, or capital and land. Moreover, if it is true that an 

 increase in the amount of labor and capital on the same amount of 

 land will not increase the product as much as the labor and capital 

 are increased, it is equally true, and for the same reasons, that an 

 increase in the amount of labor on a fixed amount of land and capital, 

 or an increase in the amount of capital used with a fixed amount of 

 land and labor, will not increase the product as much as the variable 

 factor in either case is increased. The statement can therefore be 

 enlarged by adding the following formulae to those given above: 



V. If X with Y with Z will produce P, 



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

 VII. and X with Y with oZ will produce more than P, but less than aP. 



