Economic essays

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Monograph

Identifikator:: 1753623200

URN:: urn:nbn:de:zbw-retromon-136107

Document type:: Monograph

Title:: Economic essays

Place of publication:: New York

Publisher:: Macmillan

Year of publication:: 1927

Scope:: viii, 368 S.; Ill., graph. Darst.

Digitisation:: 2021

Collection:: Economics Books

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Document type:: Monograph

Structure type:: Chapter

Title:: Elasticity of supply as a determinant of distribution / Paul H. Douglas

Collection:: Economics Books

ELASTICITY OF SUPPLY AS A DETERMINANT OF DISTRIBUTION 87 We may begin with a situation where the supplies of both factors are absolutely inelastic, as in Figure 6. The increase in output will of course cause the return to each to rise from P to P;, but this will not lead to any change in supply, since the same amount will be offered whatever may chance to be the price. There will, therefore, not be any re- adjustment in marginal productivities and the sit- uation will remain as it was immediately after the increase in output took place and the return to each factor increased by PP,. Let us assume for a second illustration that both Taussig and Kleene are correct and that the supply curves of both factors are infinitely elastic as is represented in Figure 7. Then an increase in total output and in return to both factors X and Y would cause a great ex- pansion of each along its respective supply curve. It might seem as though there would be an un- limited expansion of the quantities of X and Y since their respective rates of remuneration would be higher than the amounts P; and P at which almost infinite amounts of the factors would be produced and offered. But in real life there would be obstacles which would prevent this from happening. In the first place, the third factor, land, would not, = Fic. 6 P2| Fig. 7

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