THE PROPORTIONS OF THE FACTORS OF PRODUCTION 151 



than laborers as a means of accomplishing a given result is 

 the greater control over equipments. In case of great demands 

 for workers in other localities, laborers may leave the farmer 

 with his crops in the fields, whereas the horses and machines are 

 certain to be at the farmer's disposal when he wants them. 

 Laborers can make themselves more valuable by becoming 

 more dependable. 



Where the substitution of the one factor for the other makes 

 no change either in the quantity of the product or in the amount 

 of managerial activity required, the rule is a simple one : where 

 there is a choice between using laborers or capital-goods in the 

 performance of certain operations, choose the cheaper method. 

 And yet, the qualifying phrases in this formula are so important 

 that the problem is far from being a simple one, and in many 

 cases, perhaps in most cases, it is the more fundamental prin- 

 ciple of seeking the largest net profit per unit of managerial 

 activity which must be kept uppermost in mind. 



A change in the rate of wages without a corresponding change 

 in the cost of equipments, or vice versa, will necessitate a read- 

 justment of the relative amounts invested in the employment 

 of laborers and in the employment of equipment. As wages rise 

 relatively to interest and depreciation charges on equipment, 

 there should be less labor and more capital-goods employed. 

 Improvement in machinery often makes it profitable to substi- 

 tute capital-goods for laborers. The self-binder, the hay- 

 loader, and the windmill are examples where this has been true. 



PROBLEMS 



i. Suppose a fanner who operates his own farm with his own labor 

 finds that by putting all the time he can upon a corn crop he can 

 grow: 



60 acres of corn yielding 24 bu. per acre 

 50 acres of corn yielding 30 bu. per acre 

 45 acres of corn yielding 33 bu. per acre 

 40 acres of corn yielding 36 bu. per acre 

 35 acres of corn yielding 40 bu. per acre 

 30 acres of corn yielding 44 bu. per acre 



