324 AGRICULTURAL ECONOMICS 



that an increase in the amount of labor on a given amount of land will 

 never, in any normal case, increase the product as much as the labor 

 is increased. That is to say, except on the frontier it always pays 

 to cultivate land beyond the point where diminishing returns begin, 

 if it pays to cultivate it at all, but it never pays to cultivate it up to 

 the point where an increase in the labor would yield no increase in the 

 gross product. Similarly, since so much land is never profitably used 

 in connection with a given amount of labor as to produce the maximum 

 per unit'of labor, it follows that, in any normal case, an increase hi the 

 amount of land with such given amount of labor will always increase 

 the gross product. But since so little land is never profitably used in 

 connection with a given amount of labor as to produce the maximum 

 per unit of land, it follows that, in any normal case, an increase in the 

 land with such given amount of labor will not increase the product as 

 much as the land is increased. This is merely a reversed application 

 of the law of diminishing returns as originally expounded, and it is 

 a necessary corollary of that law. It is, moreover, the condition 

 expressed by formula IV. 



Formula VII is an expression of the law which governs any estab- 

 lishment or business unit which combines a fixed amount of land and 

 labor with varying amounts of capital. By a change of terms, the 

 explanation which was given of formula VI can be adapted to this 

 one, since the same law applies to this as to other variations in the 

 proportion in which the factors are combined. That is to say, an 

 increase in the amount of capital used hi any typical establishment 

 (land and labor remaining the same) will increase the total product, 

 but not as much as the capital is increased. On the other hand, 

 allowing the capital to remain the same, an increase hi the labor and 

 the land will also increase the total product, but not as much as the 

 labor and land are increased. 



We are therefore driven to the conclusion that there is one law 

 which governs the results of every variation of the proportion in which 

 the productive factors are combined, no matter which factor is varied. 

 It never pays to combine so little of any one factor with so much of 

 the others as to get the largest possible product in proportion to the 

 one, unless the others are absolutely free and do not need to be econo- 

 mized, in which case they pass over into the class of non-economic 

 factors, like air and sunlight. This is equivalent to saying that, 

 where each factor costs something, it always pays to combine them 

 in such proportions that if any one or two of them were increased it 



