THE THEORY OF INTEREST

These re-entrant parts would be as inoperative as if theydid not exist, and only the points on which the rollingtook place would really count in establishing equilibrium.What is left, after dropping out such re-entrant parts asineligible, is thus the “envelope” of the group of pointsrepresenting an individual’s opportunities to invest ra-tionally and must therefore be concave toward the origin.We are justified then in assuming the curved concaveOpportunity line as typical.

As to the applicability of the term investment to ashift on the M line, this is a matter of choice of words.Undoubtedly it is so applied in ordinary usage. In fact,such investments are more commonly so called than anyother. I have not been able to think of a short phrase incommon use which will apply exclusively to an invest-ment the return on which varies with each successiveamount invested. Perhaps “investment with diminishingreturns” or “investment involving exploitation,” as dis-tinct from investment by mere sale and purchase, wouldcome nearer to conforming both to usage and to the re-quirements of the case. Yet the full phrase which I haveprovisionally adopted, investment opportunity, seemsfairly correct in its implications. We seldom speak ofbuying a bond as an investment opportunity, but invest-ing in new industrial, mining or agricultural enterprises,such as radio production, or in oil wells, or orange groves,is spoken of as a real opportunity because the return isnot a standardized market figure but subject to technicalconditions as to productivity.

§8. Investment Opportunity and Impatience

We see then how distinct is the 0 line from the M line.It is still more distinct from the W line. The Willingness

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