SUPPLY  AND  DEMAND

71

ever  there  is  a  limitation  of  agents  in  production ­
  of  a  high  quality,  increasing  returns  is
impossible.  Were  the  limitation  not  serious,
or  were  the  gains  from  the  new  specialism
considerable,  it  might  still  be  that  costs  in  the
new  marginal  firm  would  be  beneath  those  in
the  old  marginal  firm.
The  abstract  law  of  decreasing  returns  is  the
correlative  of  the  abstract  law  of  increasing
returns.  It  declares  that  when  the  supply
of  some  agent  in  production  is  narrowly
restricted,  and  an  industry  absolutely  depending ­
  upon  it  enlarges  nevertheless,  decreasing
returns  must  eventually  supervene.  On  any
practical  example  being  taken,  it  will  be
perceived  that  it  must  be  so.  Suppose  that
the  population  on  an  island  of  100  square
miles  has  to  feed  itself  from  the  produce  of  its
own  land.  Sooner  or  later,  were  the  population ­
  to  grow  steadily,  there  would  be  such  a
relatively  inadequate  area  from  which  to
obtain  the  food  of  the  people  that  every  addition ­
  to  population  would  result  in  additions
to  the  produce  which  constantly  became  less
in  amount,  and  the  cost  of  food  would  rise.
For  a  time  the  tendency  to  decreasing
returns  might  be  counteracted  by  the  advantages ­
  of  specialism,  but  the  counteraction
at  some  time  would  cease  and  the  tendency