ELASTICITY OF SUPPLY AS A DETERMINANT OF DISTRIBUTION 97 
return to each would cause an equal proportionate shrinkage in 
quantity but would not throw out of balance their relative 
marginal productivities. 
If, however, we were to deal with differing elasticities, one let 
us say being 0 and the other 41.0, then the supply of the former 
or X would not contract while that of Y would, and this would 
raise the marginal productivity of Y above and depress that of 
X below the point to which they had originally fallen as a result 
of the decrease in the effectiveness of industry. Were the elas- 
ticity of X to be .5 instead of zero, then X’s loss would be less 
because its supply would also shrink as a result of the decline 
in efficiency, although not by as much as that of Y. The situation 
would be still further mitigated by the fact that the further 
decline in X's productivity as compared with Y would be partially 
arrested by shrinkage in its quantity, while that of Y would 
advance somewhat as a result of the change in proportions. But 
X would still bear more of the brunt of the burden than Y. 
When we are dealing with a combination of a negative with a 
positive supply curve, then the fall in unit return will cause the 
quantity of the former to expand and the latter to decrease. This 
will greatly increase the marginal productivity of the latter and 
diminish that of the former especially if the negative elasticity is 
greater than the the positive. 
When both supply curves are negative, the one with the greater 
negative elasticity will suffer most, since a fall in the rate of 
return will cause a greater expansion of its supply and hence will 
lower its marginal productivity. With each fall in return more 
of X would be supplied, while tle rise in the marginal produc- 
tivity of Y would cause less of this factor to be offered so that 
the disparity between the two would be accentuated. 
The conclusion is obvious therefore, that when there has been 
a decline in the net effectiveness of industry, that the factor which 
is more elastic loses less than the other factor, and such units 
of the factor as remain are able to throw a larger part of the 
burden off upon the shoulders of the other factor. The best 
protection, so far as return per unit is concerned, is to contract 
the supply greatly. 
For a factor therefore to secure the maximum advantage in 
periods of industrial advance and to suffer the least losses in 
periods of industrial depression, it should have (1) a highly