26

ECONOMIC PRINCIPLES

portion to the corresponding changes of marginal demand
price. When prices are high, and the demand, as measured
by amount of commodity demanded, is small, a considerable
fall of price is needed to cause a moderate growth in amount
demanded. When prices fall to a low level, large increases
of amount demanded are commonly consequent on quite
moderate reductions of price, from any figure selected for
purposes of making such a comparison. This proportion of
growth in demand to fall in price is designated “elasticity of
demand.” If a fraction be formed, whose numerator is the
proportionate (or percentage) increase in amount demanded,
the denominator being the corresponding proportionate
(percentage) fall in price, this fraction will measure the
elasticity of demand over the range of the movement
considered, and if the record apply to quite small changes,
the corresponding fraction measures the elasticity of demand
at the point selected as point of departure for the changes.
As stated, in general, elasticity of demand is great when
prices are low, but it may not always be small when prices
are high. It may reach a minimum figure at some intermediate
 price-level, and again become great at high prices.
For strictly luxurious expenditures the change from small
elasticity of demand to great elasticity is a familiar fact.
Fruits out of their natural season, forced to ripen at great
expense by artificial means, are practically consumed only by
the rich, and the extent of their consumption is not greatly
increased by considerable reductions in price. Such fruits as
are produced in great quantities at certain seasons, and are
then sold at a low price, experience great elasticity of
demand at such prices. Once brought within the range of
expenditure of the masses of the people, the appetite of these
masses is not readily satiated, and their demand is greatly
stimulated by reductions of price, which, small in themselves,
are considerable in their proportion to the price of the
commodity, more considerable in their effect on the willingness
 of many to purchase largely. At prices which are low
relatively to the means of even the poorer classes, goods
which manifest a great elasticity of demand at moderate
prices show a demand which has again become inelastic.