## Monday, 8 August 2016

### Capital III, Chapter 43 - Part 4

The next set of tables show the situation where the price of production is falling. This can only be the case where the marginal productivity is rising, or else where land type A is pushed out of production, so that the more fertile, lower cost lands become the regulator.

Table XVI shows the situation where marginal productivity remains constant.

 TABLE XVI TypeofSoil Price ofProductionShillings OutputBushels SellingPriceShillings ProceedsShillings RentShillings RentIncrease B 60.00 + 60.00 = 120.00 12 + 12 = 24 5.00 120.00 0 0 C 60.00 + 60.00 = 120.00 14 + 14 = 28 5.00 140.00 20.00 20 D 60.00 + 60.00 = 120.00 16 + 16 = 32 5.00 160.00 40.00 2 × 20 E 60.00 + 60.00 = 120.00 18 + 18 = 36 5.00 180.00 60.00 3 × 20 120 600.00 120.00 6 × 20

Table XVII shows the situation where marginal productivity is falling.

 TABLE XVII TypeofSoil Price ofProductionShillings OutputBushels SellingPriceShillings ProceedsShillings RentShillings RentIncrease B 60 + 60 = 120 12 + 9 = 21 5.71 120 0 0 C 60 + 60 = 120 14 + 10½ = 24½ 5.71 140 20 20 D 60 + 60 = 120 16 + 12 = 28 5.71 160 40 2 × 20 E 60 + 60 = 120 18 + 13½ = 31½ 5.71 180 60 3 × 20 120 6 × 20
Table XVIII shows the situation where marginal productivity is rising.

 TABLE XVIII TypeofSoil Price ofProductionShillings OutputBushels SellingPriceShillings ProceedsShillings RentShillings RentIncrease A 60 + 60 = 120 10 + 15 = 25 4.80 120 0 0 B 60 + 60 = 120 12 + 18 = 30 4.80 144 24 24 C 60 + 60 = 120 14 + 21 = 35 4.80 168 48 2 × 24 D 60 + 60 = 120 16 + 24 = 46 4.80 192 72 3 × 24 E 60 + 60 = 120 18 + 27 = 45 4.80 216 96 4 × 24 240 10 × 24
Where the price of production is rising, land type A may continue to be the regulator, or else an even worse soil type may begin to be cultivated, thereby becoming the regulator, and turning land type A into rent producing land.

The first set of examples assume that land type A remains the regulator.

Table XIX presents the case previously discussed, whereby the marginal productivity of the second investment remains constant or rises. This is only possible where the productivity of the first investment falls, for example, due to the wearing out of the top soil. Overall, therefore, the average productivity falls, and the price of production rises.

In Table XIX, the marginal productivity of the second investment is constant, whilst Table XXI presents the situation where it is rising.

 TABLE XIX TypeofSoil Price ofProductionShillings OutputBushels SellingPriceShillings ProceedsShillings RentShillings RentIncrease A 60 + 60 = 120 7.50 + 10 = 17.50 6.86 120 0 0 B 60 + 60 = 120 9 + 12 = 21 6.86 144 24 24 C 60 + 60 = 120 10.50 + 14 = 24.50 6.86 168 48 2 × 24 D 60 + 60 = 120 12 + 16 = 28 6.86 192 72 3 × 24 E 60 + 60 = 120 13.50 + 18 = 31.50 6.86 216 96 4 × 24 240 10 × 24

 TABLE XXI TypeofSoil Price ofProductionShillings OutputBushels SellingPriceShillings ProceedsShillings RentShillings RentIncrease A 60 + 60 = 120 5 + 12.50 = 17.50 6.86 120 0 0 B 60 + 60 = 120 6 + 15 = 21 6.86 144 24 24 C 60 + 60 = 120 7 + 17.50 = 24.50 6.86 168 48 2 × 24 D 60 + 60 = 120 8 + 20 = 28 6.86 192 72 3 × 24 E 60 + 60 = 120 9 + 22.50 = 31.50 6.86 216 96 4 × 24 240 10 × 24
Table XX presents the situation where the marginal productivity of the second investment is falling, so here there is no need to assume that the productivity of the first investment is falling.

 TABLE XX TypeofSoil Price ofProductionShillings OutputBushels SellingPriceShillings ProceedsShillings RentShillings RentIncrease A 60 + 60 = 120 10 + 5 = 15 8 120 0 0 B 60 + 60 = 120 12 + 6 = 18 8 144 24 24 C 60 + 60 = 120 14 + 7 = 21 8 168 48 2 × 24 D 60 + 60 = 120 16 + 8 = 24 8 192 72 3 × 24 E 60 + 60 = 120 18 + 9 = 27 8 216 96 4 × 24 240 10 × 24