2 BULLETIN 1: 
what are these variations due? Partly to differences in conditions 
peculiar to individual farms, and partly to differences in the ad- 
justments made to existing economic conditions. Examples of the 
conditions peculiar to individual farms are heavy soils requiring 
extra labor in plowing and hilly fields preventing the use of im- 
proved machinery; examples of differences due to economic adjust- 
ments are that some farmers fatten livestock on wheat, whereas 
others fatten on corn, and that some farmers apply no fertilizer to 
crops, whereas others apply several hundred pounds per acre. 
What is the relation between these variations in methods and 
practices and the product obtained? Many things are used in 
growing any farm product — materials, labor, machinery, land — to 
mention only a few. The net contribution of each of the produc- 
tive factors must be measured in determining the effect of the varia- 
tions in any one. 
Furthermore, farming is conducted under conditions of diminish- 
ing returns. This means that it can not be assumed that 400 pounds 
of fertilizer per acre will have twice the effect of 200, or that 20 
pounds of corn fed to a beef steer per day will produce twice as 
much gain as 10 pounds. Hence, measuring the average effect per 
unit of each productive factor is not sufficient; to be adequate, any 
study must show the effect upon output of each particular variation 
in input. 
Changes in economic conditions frequently cause wide fluctuations 
in the relative costs of the various productive factors and in the 
prices of farm products. Hence, the most advantageous adjustment 
of the practices employed in each enterprise can not be made once 
for all ; they must be constantly altered to meet changing price con- 
ditions, if the best results are to be. obtained. Furthermore, while 
we can actually measure only what has already happened, the farmer 
is concerned not only with what has been most profitable in the past, 
but with what is the most profitable now and will be in the future. 
To be adequate, the analysis must therefore be so devised as to assist 
him in making the shrewdest possible adjustment to coming con- 
ditions. 
The method of study presented in this bulletin begins with a de- 
tailed analysis of the variations in methods and practices (input 
variations) , and the effect of these variations upon the product (out- 
put per unit of input). The basic data thus obtained are then used 
to determine the least-cost combination of inputs by applying value 
rates to the inputs and outputs at various combinations of the input 
factors. The least-cost combination is that combination which will 
produce the product at the least cost per unit of output. 
However, since farmers are interested in obtaining the greatest 
total profit rather than the greatest profit per unit of product, one 
further step is necessary to take into account the volume of product 
as well as the profit per unit. Considering the value of the product 
per unit and the volume of production at various combinations of tine 
input factors, it is possible to estimate the total profit from the enter- 
prise for different input combinations and thus to determine the 
most pro-fit able combination of input factors. 
The practices in the handling of a specific enterprise, dairying for 
example, may be considerably altered without changing the general 
balance of the farm enterprises or necessitating any change in farm 
