THE PROPORTIONS OF THE FACTORS OF PRODUCTION 145 



This means that the point of maximum net returns is reached, 

 in the case of a share tenant, with the application of the same 

 number of units which yield the largest average gross product. 



Other things remaining the same, how will a change in wages 

 and interest influence the intensity of culture? Suppose that 

 wages and interest fall twenty per cent ; will it then pay the 

 farmer to invest more units per acre ? If the rent should re- 

 main the same as before the reduction in wages and interest, 

 and if the foregoing reasoning with regard to the proper in- 

 tensity of culture be true, the degree of intensity in terms of 



FIGURE 8 



quantities of labor and capital-goods which would yield the 

 largest net return would not change ; but the expenditure per 

 acre in value would be decreased and the profits of the farmer 

 would be increased in the same proportion. This higher profit 

 might increase the demand for land, however, and this would 

 likely result in a rise in rents, after which it would pay to in- 

 crease the quantity of labor and capital-goods employed, 

 excepting in the case of the share tenant. 



The influence of a rise or fall in the price for which the prod- 

 uct can be sold will influence the degree of intensity only 

 as it may affect the amount of rent which must be paid for the 

 use of land. As prices rise the rent tends to rise and the degree 

 of intensity should be increased, while the reverse is true in the 

 case of falling prices. This is true because land of a given degree 

 of productivity is limited, and as labor and capital-goods increase 

 in quantity, land of a less productive grade must be resorted to, 

 and without improvements this is possible only when wages and 

 interest fall or prices rise. But there is a close relation between 



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