AbstractElasticities of production for nine input categories in U.S. agriculture were estimated with the assumption that factor shares adjust to the production elasticity with a distributed lag. A Cobb‐Douglas production function was formulated from the estimated production elasticities and used to show the economically optimum level and combination of aggregate resources in U.S. agriculture. Adjustment to the least‐cost input combination which would produce the actual average 1952–1961 output would have reduced the actual input dollar volume by $1.9 billion, or 5.6 percent. Adjustment of farm resources to an equilibrium level, with all resources earning an opportunity‐cost return would have entailed a reduction of 4.2 billion 1947–1949 dollars, or 12.5 percent of the actual input volume. The cost of excess capacity was approximately $2.2 billion or 6.6 percent of the resource volume; the cost of a nonoptimal input mix was $2.0 billion or 5.9 percent of the resource volume. Two‐fifths of agricultural labor was estimated to be in excess supply in the 1952–1961 period.