THE PROPORTIONS OF THE FACTORS OF PRODUCTION 137 



such a result. There are at present no data from which to 

 calculate the exact curve which the returns per succeeding unit 

 will follow, but the general rise followed by a general fall is a 

 matter of common observation. 



With this illustration (Fig. 7) before us, suppose the farmer 

 has one thousand of these composite units, made up of laborers 

 and capital-goods, to expend in agricultural production. In 

 other words, suppose that this farmer has found that he can 

 secure the largest net profit when he operates just one thousand 

 of these units of labor and capital-goods. With free land at his 

 disposal, how many acres will he use and how many units will 

 he employ upon each acre ? Will he apply five units, per acre 

 and use two hundred acres of land ? No, his expenditures will 

 produce a greater total product when he employs six units per 

 acre and confines himself to one hundred and sixty-six and two- 

 thirds acres. But will this make the labor and capital-goods 

 most productive? On first thought one might answer yes, 

 because the seventh unit adds less to the product than the sixth ; 

 but upon looking more closely into the matter, it is apparent 

 that there is no good reason for ceasing to apply more units 

 simply because the point of diminishing returns per succeeding 

 unit has been reached. The seventh unit may add less to the 

 total product than the sixth, and yet add more than any of 

 the first four units, and the average product per unit may be 

 greater when seven units have been applied than when only six 

 have been expended. Hence the total product of the thou- 

 sand units may be greater when seven units have been applied 

 to each acre and only one hundred and forty-three acres of 

 land employed. But at what point should the farmer cease 

 to increase his applications per acre of land ? It is obvious that 

 there is a limit, that, for example, a thousand units expended 

 upon one acre of land in the production of Indian corn would 

 yield a smaller return per unit than when more land is used and 

 the number of units applied to each acre is more limited. But 

 what is the limit ? It is true that in the case before us the sixth 

 unit increases the total product more than any unit before or 

 after it, but all units cannot be sixth units. The first, the second, 



