15 



d. It is possible to get a definite figure to represent degree of 

 diversity by a slight extension of the principle involved in the last 

 method. When the magnitude of any one enterprise approaches 

 100 per cent of the magnitude of the farm business the business is 

 approaching the status of single enterprise farming. Also, when 

 all the enterprises are equal in magnitude the number of these enter- 

 prises is a measure of diversity. The highest possible degree of 

 diversity consists of an indefinitely large number of indefinitely 

 small enterprises. Then when any enterprise increases in mag- 

 nitude it tends to reduce the degree of diversity of the business. If 

 the magnitude of each enterprise be expressed in percentage of the 

 magnitude of the farm business, and if each magnitude be weighted 

 according to its distance from zero magnitude, then the sum of these 

 weighted magnitudes divided into unity will give a definite figure 

 which is a very accurate measure of diversity, and which is exceed- 

 ingly useful in studying the effect of actual diversity on the effi- 

 ciency of the business. Since the magnitude of an enterprise is 

 also its distance from zero, the weighted magnitudes above men- 

 tioned are simply the squares of the individual magnitudes. Hence 

 the following simple rule for calculating the degree of diversity of 

 the farm business: 



Diversity index: First express the magnitude of each enterprise 

 in percentage of the sum of all these magnitudes; 1 square each of 

 these percentages; find the sum of these squares; then divide unity 

 by this sum. 



All the above calculations are easily made on the slide rule, squar- 

 ing numbers by means of the slide rule being an especially easy and 

 rapid process. The percentages should be expressed decimally 

 and carried to the third decimal place. Thus 15.5 per cent should 

 be expressed as .155. The squares should be carried to the fourth 

 decimal place. One decimal place is sufficient for the final result. 

 Example: 



i If receipts from an enterprise are used as the measure of its magnitude, ignore 



