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

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

Collection:: Economics Books

ELASTICITY OF SUPPLY AS A DETERMINANT OF DISTRIBUTION 89 of which the same money price is paid. For each factor there can be chosen arbitrary units which will bring it on the scale. The scales represent the relative rates of increase in the supplies of the two factors. A given distance represents equal rates of change in their respective supplies or equal rates of change in that which is paid. It is therefore a double logarithmic scale which we are using. Returning to the situation illustrated in Figure 7, it is apparent that an increase in the effectiveness of industry and the rise in the payment to both X and Y from P to P; would cause a proportional increase in the quantity of each. But sinee both factors would increase at the same rate, the proportions between X and Y would tend to be unaltered and hence their relative marginal productivities would be changed if at all from conditions affecting the productivity curve, not the supply curves. When the elasticities of supply are equal, the two factors tend to share equally, in terms of both unit and proportional returns, in the gains resulting from an increased effectiveness of industry. We turn now to a slightly more complicated and more interest- ing case, namely that where the supply of the factor X is com- pletely inelastic and that of the other Y has positive unit elas- ticity. This may be represented by Figure 9 where the line A S represents the inelastic factor X and that of SS; the factor Y with an elasticity of 1.0. The supplies of both when in an original state of equilibrium are represented by A and the price paid to each by P. The initial increase in the rate of remuneration to each from P to P; will create a difference in the relative supplies of the factors. That of X will not increase at all since it is by hypothesis absolutely inelastic, but that of Y will tend to expand at a ratio equal to the relative increase in return per unit. S:

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