Chapter 9: The Law of Diminishing Returns

1. Is it possible to do twice the amount of business in any store-room by doubling the stock and the force of clerks?

2. Is it possible to expand a university indefinitely by increasing the force of teachers and the equipment, without enlarging the buildings?

3. Why do men cultivate two acres instead of one? Where land is plentiful, why do not men cultivate two acres instead of one?

4. Are there any things, not free goods, that could be indefinitely increased without increasing difficulty?

5. English farmers raise thirty-five bushels of wheat per acre, Americans perhaps fifteen; why this difference?

6. Why did people go to Dakota and Iowa when there was still room in New England?

7. Why put up a twenty-story building? Why not build a fifty-story one?

NOTE.--The broad reading here given to the law of
diminishing returns is so recent that even the latest texts
have recognized it only in a partial manner, defining "the
law" in the old terms confined to land. For the old
statement see J. S. Mill, _Principles of Political Economy_
(1846), Bk. I, ch. XII. Writers even so advanced as Alfred
Marshall follow Mill with no essential modification. For a
good historical account of the doctrine see Edwin Cannan,
_History of the Theories of Production and Distribution_,
pp. 147-182 (1893; 2d ed., with additions, 1903), which
advances no positive theory, but makes evident many
inconsistencies in the older view. A keen analysis and
important contribution to economic thought was made by J.
R. Commons, _Distribution of Wealth_, pp. 116-159 (1895).
John B. Clark, in various earlier articles, and in his
_Distribution of Wealth_ (1900), has done more than any one
else to develop the conception of "a universal law of
economic variation." In magazine articles by various
writers, the same idea has been developed, but no
thorough-going application of it has been made in the
available text-books.