RENTS AND PROFITS 197 



on fourth-grade land and pay a rental of $245 for its use, 

 $980 ($500+1235) =$245. But so far as the competition 

 of his inferiors is concerned, any amount over $225, let us 

 say $230, is all the D-grade farmer need pay for fourth-grade 

 land. This will leave him a profit of $250, $980 ($5oo-f-$23o) 

 = $250, which is $15 more than he could make on fifth-grade 

 land at the rent the E-grade farmer is willing to pay. To 

 secure the same profit on third-grade land the D-grade farmer 

 cannot pay more than $370 for its use, $1120 ($5oo+$25o) = 

 $370. But the C-grade farmer, whose profits on fourth-grade 

 land at a rental of $230 would be $390, $1120 ($500+1230) = 

 $390, can secure the same profit from third-grade land after 

 paying $390 as rent, $1280 ($5oo+$39o) =$390. It will 

 be profitable, therefore, for C-grade farmer to outbid the D- 

 grade farmer for the use of the third-grade land by paying $375, 

 for this will leave him a profit of $405 ; $1280 ($5oo+$375) = 

 $405. To secure the same profit on second-grade land, the 

 C-grade farmer can bid no more than $535 for its use, $1440 

 ($500+ $405) =$535. But the B-grade farmer whose profit 

 on third-grade land at a rental of $375 would be $565, $1440 

 ($5oo+$375) =$565, can secure the same profit from second- 

 grade land after paying a rental of $565 as rent, $1620 

 ($5oo+$565)=$555. It will be profitable for him, therefore, 

 to outbid the C-grade farmer for second-grade land by paying 

 $540. This will leave him a profit of $580; $1620 ($500 

 +$540) =$580. The B-grade farmer could pay no more than 

 $720 for the use of the first-grade land and retain this same net 

 profit, $1800 ($5oo+$58o) =$720; but the A-grade farmer 

 can pay any amount up to $740 for first-grade land rather than 

 take second-grade land at $540 ; for his profit on second-grade 

 land would be $760 ; $1800 ($5oo+$54o) =$760, and $2000 

 ($5oo+$76o) =$740. As $720 is the most any other cbmpeti- 

 tor can pay for the use of first-grade land, the A-grade farmer 

 can secure this grade of land for a fraction over that amount, 

 let us say, $725, and retain a profit of $775. 



It is a matter of common observation that competition tends 

 to distribute the farmers on the different grades of land in ac- 



