This section is from the "Economics In Two Volumes: Volume I. Economic Principles" book, by Frank A. Fetter. Also available from Amazon: Economic
§ 6. The doctrine of separable uses. "We may think of the use of an object not as one undivided whole, but as a group of uses, separable each from the other. Likewise anyone of these uses is separable from the use-bearer considered as a concrete object. Every economic good, the use of which can be spread throughout a period of time, may be looked upon as consisting of groups of uses. The simplest case of this results from mere physical divisibility. A basketful of peaches is eaten piece by piece; each peach may be counted as one use. In this case the use is consumptive: it is not separable from the using up of the use-bearer itself.
The truly separable use, however, is found in the case of a durable agent which continues through a period of time to render a series of durative uses. A very perfect example is a diamond necklace, the sparkle and charm of which is a use which is absolutely without detriment to the use-bearer (i.e., the necklace, tho perhaps not to the wearer). Many agents have this enduring quality more or less fully (see Chapter 11 on Consumption and Duration), and in all such cases the durative use may be treated practically and theoretically in economics as something separable from the use-bearer, in matters of valuation, of trade, and of price. The peaches may be gathered without harming the fitness of the trees to produce another crop. Shelter is furnished, once the house is built, without destroying the house more than disuse would, if it stood tenantless. The horse is the better if driven moderately each day, and the carriage lasts for years. In every such case, the use is something different from the "using up" of a limited number of goods, for there is left in the use-bearer the power to go on yielding indefinitely some more of the same product or use if it is kept in repair.
Some of the uses contained in a use-bearer may be actual or realized; others may be and may remain merely potential. Or they may all be realized in the course of a period of time, at the end of which the good is entirely consumed or worn out. The uses of a suit of clothes, for example, may be realized only day by day for a considerable period. Some men go on wearing a suit until it is almost completely worn out before discarding it; others discard clothing while there are still many possibilities of use in it. It may perhaps be safely asserted that the great majority of things have potentialities of which the owner for one reason or another does not avail himself. As already indicated, it does not pay to squeeze all possible uses out of a good. Uses 8, 9, etc. (beyond 7 in Figure 20), are quite possible of realization, but the attendant inconvenience or sacrifice is so great that they are valueless, and they will be ignored. The owner will not forego his sleep because he dislikes to have the piano go unused through the hours of the night.
In the case of a durable good circumstances may warrant a very slight utilization at one time and a very much more complete utilization at another. The factory which has been running on half-time may later be operated day and night to meet a great increase in demand.
§ 7. More intensive utilization. The uses of a good at a given time are actual or realized up to a point, limit, or margin beyond which further uses would not be worth the outlay of effort or of other goods. This point in the utilization is called the intensive margin. Using the thing more and more, while uniting other things with it, is using it more intensively. Getting more use out of the book by effort, out of the farm by applying more fertilizer, out of the factory by employing two or three shifts and working longer hours, out of the house by putting more people in it, is intensive utilization. The superior uses come easily, naturally; the inferior ones are to be secured only with increasing difficulty. When some change comes - such as an increase in demand for the product of an agent - which causes that agent to be more intensively utilized, this change is said to have lowered the (intensive) margin of utilization. The inferior grades of uses are being resorted to.
* The use a is the highest in the sense that it is the most easily obtained. Like results are to be had by the use of b to g successively only at greater costs; or less valuable results at the same costs.
§ 8. More extensive utilization. This same change of demand may, however, bring about a simultaneous change of a different sort. If there are various agents of different degrees of excellence, and only the better grades are being used to meet this particular demand, then an increase in the demand is likly to result not only in a more intensive utilization of the superior agents, but also in the calling of some of the inferior agents into use. The best agents that are available at the time are used first, but as they are more intensively used, there is increasing inconvenience. This may be relieved by using either physical duplicates of the better agents or by using inferior agents. If there is more than one of a certain kind of agents, the duplicates are distributed so as to be where most valued by the owner. A man having two umbrellas keeps one at his office and the other at home; a student having two books of the same kind keeps one at his room and the other at the university; a farmer having two hoes keeps one at the barn and the other in a distant field, and by this method the additional units have higher uses than if they were used in the same way or at the same place as the earlier units.
It may finally be necessary to have recourse to agents which as a whole are inferior to the other agents, but whose first uses are better than the remaining intensive uses of the better grades of agents. This employment of inferior agents is also called lowering the margin of utilization. But it is a different margin with which we have to do - the margin between superior and inferior agents. It is the extensive margin. At the same time that an increase in demand causes the use of double shifts in the efficient factory, another factory, of inferior efficiency, which has been completely idle, may be brought into use, tho possibly not to its full capacity. There has then occurred a change or lowering of both margins. At the same time that the cultivation becomes more intensive on the better fields, it becomes more extensive if there are other areas which have just come to have valuable uses. The intensive margin of use is in the particular thing; the extensive margin is the line between the superior and the inferior good. The inferior agent which is not utilized is spoken of as "below" or "beyond" or "outside of" the (extensive) margin of utilization. The interrelations between the two margins are shown in the diagram.