' The rectangles, Id, N, 0, P, Q, represent agents of various grades, each consisting of strata of uses. The best uses are a, b, and c, in M; but after M has been utilized intensively down to d, N will begin to be utilized at its highest point. When utilization goes down to f, 0 comes into use, and so on. Therefore it will be seen that until the intensive margin takes in d, N is on the extreme margin of utilization, and N is just outside it; when the intensive margin falls to g and h, P is inside the extensive margin, and Q is just outside.
§ 9. Application of complementary agents at the two margins. It is not our purpose at this point to emphasize the fact (important as it is) that changes of demand occur, and that these changes cause the best economic proportion to change. Rather we use illustrations of change to make clear that in any given set of conditions there is a best proportion in which to combine agents. There is a right degree of eco nomic utilization in that particular situation. Where this best proportion is attained, is a point of economic equilibrium, in the sense that there is in the situation itself (and until some other conditions change, as invention, increased demand, etc.) no motive to change the proportion. In such a case the effort is made to repeat the process, to maintain just that proportion which has been found to be on the whole best. If either of two complementary agents is used in greater or less amount than this best proportion, a loss results, something less than the possible maximum of value is obtained.
Now the case of the two margins always occurs when one of the complementary agents is present in more than one qual ity or grade, as respects stuff, form, or place. Then the supply of the complementary agent is distributed over the different grades of uses, now to the lower uses in the better agent, now to the upper uses of the poorer grades. In this way the ef fectiveness of each unit of the complementary agent is kept equal on the intensive and on the extensive margins of utiliza tion of goods. As the value of the added product in the more intensive use of a particular agent decreases, a point finally is reached where it is better to transfer the outlay to another agent, to shift from the intensive to the extensive margin, by going over to the use of another field or of another machine'not so good. As the effectiveness of the labor, of the machinery, of the lands, of complementary agents of every kind, that men have to apply to two grades of another agent is being com pared constantly, the uses of the complementary agents are 1 We are studying here the static problem. In Part VI, chs. 32-39
the dynamic problem is much more fully treated.
distributed along the two margins. The margin of utilization is marked by a line of uses valued at zero. When used to that point the total value obtainable from the agent is at its maximum. If utilization is less intensive the value of the last possible use is lost, and if it is more intensive there is a net loss on the outlay.
§ 10. The principle of proportionality in agriculture. The principle of proportionality applies to the use of agents in all kinds of business and determines the degree of their economic utilization. This general principle was first for mulated in reference to land in agriculture, and for a long time was supposed to be peculiar to the use of that class of agents.' The use of land in agriculture is conditioned on the pres ence of a top-soil of suitable mineral elements and texture, and on a proper surface, exposed to light, air, and sun, with the necessary climatic influences of temperature, moisture, etc. It was long ago seen that on such a piece of land a crop larger than usual could be obtained only with greater effort or It is obvious to every farmer and gardener that he cannot indefinitely increase his crop, that two men cannot always produce twice as much as one man on a fixed area of land, and that in general the product does not vary either up or down in proportion to the labor and materials applied. In stead of 20 bushels to the acre, 25 or 30 bushels might be raised, but it would require more plowing, labor, seed, fer tilizer, and other expenses, in value greater than the addition 2 Of this supposed peculiarity various explanations were given, such as the chemical qualities of the soil, and as the assumed durativeness of agricultural land, etc.
S Note the significance of the phrase "larger than usual." Surely the crops may be larger some years than others, and especially large in those years when there is remarkably favorable union of rainfall, temperature, freedom from pests, etc. "Larger than usual" means larger than on the same, or on like, land under circumstances alike except in respect to intensiveness of cultivation.