ELASTICITY OF SUPPLY AS A DETERMINANT OF DISTRIBUTION 105 
of each factors, that of X rising above P but appreciably below 
Pi, while that of Y will fall below P but will still be appreciably 
above Pp. The ultimate points of equilibrium may then be 
designated as P3 and Py, and at these prices A E fewer units of 
X and A D fewer units of Y will be forthcoming. 
Had the elasticity of Y been 2.0 instead of 1.0, then the ulti- 
mate unit gain secured by X would have been still less; for as 
the marginal productivity of Y fell because of the fact that 
less X was mixed with it, the supply of Y would contract twice as 
rapidly as before and hence the forces working for the reéstab- 
lishment of the equilibrium would be strengthened. But while 
the unit returns to X and Y would ultimately approach nearer 
to P, than P3 or Py they would not quite reach it. X would 
therefore retain some gain and Y would suffer some loss. 
The conclusion is, therefore, that (1) the more inelastic a 
factor becomes the more it will gain from an increase in bar- 
gaining power, while (2)—and this is less appreciated—the more 
inelastic is the supply of the rival factor, the better it is for 
the factor whose bargaining power has improved. The units of a 
factor which remain will desire, therefore, that their numbers 
should not expand under 
prosperity nor that those 
of its rival should de- 
crease under adversity. 
Still more interesting 
results of the same gen- 
eral character are secured 
when we deal with one or 
more negative supply 
curves. Let us suppose 
(Figure 20) that X has 
originally a positive elas- 
ticity of 1.0 and Y an 
equal negative elasticity. 
We shall designate the 
supply offered of each by 
A and the unit price paid 
as P (AS). Let us now decrease the elasticity of X to 1.9. 
This will cause only B units of X to be offered for P, and in 
consequence its marginal productivity would rise and that of 
Y would fall. This increase in return would cause the quantity 
83 A 
Fic. 20