SUPPLY AND DEMAND 
71 
ever there is a limitation of agents in pro 
duction 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 depend 
ing 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 popula 
tion to grow steadily, there would be such a 
relatively inadequate area from which to 
obtain the food of the people that every addi 
tion 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 ad 
vantages of specialism, but the counteraction 
at some time would cease and the tendency