82 ECONOMIC ESSAYS IN HONOR OF JOHN BATES CLARK 
tive supply curve an increase in price is accompanied by an 
increase in the quantity supplied and a reduction in price 
is accompanied by a decrease in the quantity supplied. The 
negative supply curve PP, on the other hand, represents a supply 
schedule where the higher the price the less is supplied and where 
with a reduction in price more is offered. 
Elasticity of supply is the relative change in quantity supplied 
which accompanies a relative change in price. Virtually the same 
formula which Marshall? used to measure the elasticity of 
demand can be applied to measure the elasticity of supply. We 
may then write this formula: 
aX 
X 
B= 7 3P 
ED 
Where E—elasticity of supply 
X—quantity of factor (or commodity) offered 
P—price per unit 
d-=the symbol to designate a differential, in this case an 
infinitesimal difference in X or P. While both dX 
and dP approach zero as a limit, the ratio Sis in 
general not equal to zero. In the examples 
immediately following it has been assumed that a 
change of one per cent may be considered to repre- 
sent an infinitesimal change with sufficient accuracy 
for the purpose in hand. 
mE 
If we may be pardoned then an example based on finite differ- 
ences let us assume that in a given economy the price of labor 
! This manuscript was printed while Professor Douglas was in Russia. 
At the time that the undersigned was asked to see it through the press it 
had been advanced to the galley stage with all the plates of the figures 
made. Certain corrections that otherwise would have been made must be 
left to the indulgence of the reader. 
Wherever (as in Figure 3) supply curves are shown as straight lines 
and yet as having constant elasticities other than 0, +1 or oc it follows 
that the figure is on a double logarithmic scale. The part of the plate that 
looks like a zero origin with axes running through it must not be so 
interpreted. 
In all the plates having two supply curves the intitial state of equilibrium 
should be represented by two points instead of one—S. W. W. 
2 Marshall, Principles of Economics (6th edit), p. 839. Marshall's 
formula for the elasticity of a demand curve has a negative sign.