and get as
its pay. This leaves the area between the horizontal line running from
_B'_ and the section of the descending curve as the rent of the land.
A third unit of labor and capital produces what is represented by the
area between _BB'_ and _CC'_, and this becomes the standard of pay for
all units, leaving the enlarged area above the horizontal line at _C'_
as rent. In the end there are ten units of labor and capital. Their
total earnings are expressed by the area of the rectangle below the
horizontal line running from _J'_, and the sum of all the areas above
that line is rent.

[Illustration]

_The Intensive Margin of Cultivation._--The extensive margin of
cultivation is the land that is adjacent to an imaginary boundary line
separating the grades of land that are good enough to be used from
those that are too poor to be used. There is, however, what may be
called the intensive margin of cultivation. A given bit of land is
said to be cultivated more and more intensively when more and more
labor and capital are used on it. Land is subject to what is called
the law of diminishing returns.

_Law of Diminishing Returns._--The more labor and capital you employ
on a given piece of land, the less you will get as a product for each
unit of these agents. What the last unit of labor adds to the
antecedent output is less than was added by any of the other units,
and the same is true of the last unit of capital. As we continue the
process of enlarging the working force and adding to the working
appliances, we reach a point at which it is better to cease putting
new men with their equipment at work on this piece of land and to set
them working on a bit of land so poor that it was not formerly
utilized at all. We may assume here that what a man needs, in the way
of auxiliary capital, goes with him, whether he joins a force that is
working on good land or migrates to a less productive region. He will
go if it will pay him to do it. In this way we make a sort of dual
unit of labor and capital and apply a series of such units to land.

_Ground Capital and Auxiliary Capital Distinguished._--Land itself is
a component part of the permanent fund of productive wealth to which
we have given the generic name _capital_. It differs from other
capital goods in that it does not wear out and require renewing.
Working appliances, however, as they wear out and are replaced,
constitute a permanent fund of auxiliary capital, and we shall app