THE RENT AND VALUE OF FARM LAND 625 



With all grades of farmers competing for the use of land, the 

 differential rent of A grade land will be greater than n; for, at a rent 

 of n, all but the marginal farmer will prefer it to inferior land, because 

 the extra product, due to superior qualitative efficiency, is greater 

 on the more productive land. Each farmer seeks to win the largest 

 possible personal profit; and, as a result of competition for better 

 land, rent will rise, until one by one the less efficient farmers find it 

 preferable to take less productive land at a lower rent. The most 

 efficient farmer can pay more for the best land than any of his com- 

 petitors can afford to pay, and still receive a larger personal profit for 

 his superior efficiency than he would receive from the less productive 

 land at the lower rents which the less efficient farmers pay. Differ- 

 ential rents will, for this reason, be greater than the differences in 

 productivity when we measure productivity in terms of the value of 

 the product which the land will yield when farmed by the marginal 

 farmer. 



When each farmer has taken the land for which his degree of 

 efficiency enables him to compete to best advantage, the marginal 

 farmer will be found upon marginal land, the average farmer upon 

 average land, and the most efficient farmer upon the most productive 

 land. The product resulting from this most economical application 

 of efficiency to productivity will be measured by the area ACD'B. 



The line XD', which may be called the rent curve to distinguish 

 it from the product curve CD', is drawn arbitrarily to illustrate the 

 way in which rent will rise above line DD'. Point X will be some 

 place between D and K, because, as has been shown, the differential 

 rent of A grade land can neither be less than n nor more than 2n. 

 With continuous and regular gradation of land and of farmers this 

 rent curve would be regular, but with irregular gradation of either 

 factor it will be irregular. Thus the area EDD' (Fig. i) represents 

 the differential rent where all farmers have the same degree of effi- 

 ciency as the marginal farmer, and the area DXD' represents the 

 further differential which arises from variations in the efficiency of 

 the farmers. These two constitute the differential rent which would 

 be paid under the conditions laid down at the beginning of \ his dis- 

 cussion; namely, equal amounts of labor and capital on all grades of 

 land and perfect competition. 



The remainder of the surplus represented by area XCD' goes to 

 the farmers as personal profits, the amount of personal profit received 

 by a given farmer depending upon his relative degree of efficiency. 



