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APPENDIX

3I3

however, PN represent the amount of the produce
ided by the expenditure ON, the shape of the curve
not dependent on the price of produce. Variation of
+ price of produce causes the slope of the line OCE to be
iginged, and consequently changes the position of P and the
~=igth of CP, that is to say, modifies the most appropriate
ensity of cultivation and the rent-yielding power of the
id. The relation of price of produce to rent is thus one
which, though the former has a great influence on the
ter, the converse does not hold (¢/. p. 110). If prices
1, OCE swings upward towards Oy, and P moves to the
t in consequence, CP decreasing in length. If prices rise,
_E swings downward towards Oz, P moves to the right,
d CP increases in length. These results depend on the
sumption that the curve, in the neighbourhood of P, has its
ncave side facing towards O and the line OCE. If the
portion of PN to ON decreases as P moves to the right,
d increases as P moves to the left, in the neighbourhood of
¢ point indicated by making CP a maximum as above, this
1 be true. These conditions simply amount to the assumpm
 that diminishing returns have become operative before
e stage of cultivation corresponding to the position of P is
iched, and continue to hold for somewhat higher degrees
intensity of cultivation. It involves no assumption as to
e shape of the curve near O. .
If #p be an ordinate very close to NP, the tangent at P is
e line Pp. Hence, if #p cut OCE ing, ¢p is equal to CP.
1e product np is greater than the product NP, but the whole
the excess is comprised in the amount by which 7c exceeds
C. The expenditure O# requires the product 7c to commnsate
 it, The surplus ¢p is thus not affected. The
lditional expenditure N# requires the entire addition which
secures to the produce to meet the addition to outlay.
he addition to the produce is the marginal product, and its
st is the additional outlay Nz. Thus the cost of producn
 of the marginal output is equal to its value. Changes
the shape of the curve may be made, modifying the
nount of the surplus, Ze. the rent-yielding power of the
nd, and altering the intensity of cultivation, without affectg
 the cost of production of the marginal output.
If the produce curve of Fig. (xi) be expressed by the
uation

a"

=

|

J =f €9)
le value of ¥ which corresponds to a given value of x is the

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