624 AGRICULTURAL ECONOMICS 



is qualitatively twice as efficient as the one who possesses D degrees 

 of efficiency, and that the other farmers are graded according to their 

 efficiency from C to D, as the land is graded from A to B. The 

 farmer who possesses C degrees of efficiency can produce twice as 

 much on land of any grade as the farmer with D degrees of 

 efficiency. The D grade farmer is the marginal farmer, and must 

 receive enough on marginal land to cover costs, including a living. 

 On the A grade land, which is twice as productive as the marginal 

 land, he can produce twice as much with the same outlay, and is 

 willing to pay a differential rent for it equal to one-half the 

 product. 



Let us say that the D grade or marginal farmer's product on B 

 grade land is valued at n (represented by line BD' in Fig. i), that his 

 product upon A grade land is valued at 2n (represented by line AD}, 

 and that he is willing to pay a differential rent of n (line ED] for the 

 use of A grade land. Then the value of the product of the C grade 

 farmer, who is qualitatively twice as efficient as the marginal farmer, 

 will be in (line BC') on B grade land and ^n (line AC] on A grade 

 land. Thus, while the C grade farmer can win an extra product 

 valued at n (line D'C'} on B grade land, his extra product on A grade 

 land, above what the D grade farmer could produce, is valued at 2 

 (line DC). Hence the C grade farmer will not compete for B grade 

 land until the rent on A grade land rises sufficiently to absorb half 

 of this extra product, so that his personal profit will be the same on 

 both pieces of land. Until rent rises to 2n on A grade land (that is, 

 to point K in Fig. i, and measured by line EK), the personal profit 

 which the C grade farmer can win on such land will be greater than 

 that which he could win from B grade land. If the differential rent 

 of A grade land should rise to 2n (that is, to point K), the C grade 

 farmer's personal profit on A grade land (represented by line KC) 

 would be the same as that which he could win on B grade land (rep- 

 resented by line D'C), being valued at n in either case. But, while 

 the C grade farmer will pay a rent of 2n for A grade land rather than 

 farm marginal land, the D grade farmer will take marginal land rather 

 than pay more than n for A grade land. With the given hypothesis 

 the differential rent of A grade land will not be less than n (measured 

 by line ED}, for the D grade farmer can afford to pay that much for 

 its use. It will not rise higher than 2n (measured by line EK}, for 

 the C grade farmer would then prefer marginal land, for which no 

 economic rent is charged. 



