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

90 ECONOMIC ESSAYS IN HONOR OF JOHN BATES CLARK If no obstacles intervened it would increase by the proportion A B, which in this case of unit elasticity would bear the same rela- tion to A as PP; to P. But since the supply of Y had increased and that of X had remained constant, the marginal productivity of X would certainly be greater in terms of Y than it would have been had their elasticities been equal. The unit return to X would therefore rise above Pi, to, let us say, P.. The marginal productivity of Y, on the other hand, would have fallen because there would be relatively more of it mixed with each unit of X than before. Its return per unit would therefore fall below P; to, let us say, Ps. But this very decrease in the marginal productivity of Y would in turn dampen off the rate of growth of the curve and would cause less than B to be produced and would lessen the rate of increase in the unit return to X and bring it down below Po. But how far would this process of readjustment go? It would not be sufficient to bring the return to X back to P; or of Y to P; since Y would certainly show some increase in its total quantity, and any increase in unit return over O P would call forth a proportionate increase in the quantity supplied of Y while the supply of X would not increase. There would, therefore, be a permanent increase in the quantity of Y offered over the supply A and hence an increase in the relative marginal pro- ductivity of X in terms of Y. The return per unit of X would rise above P; while that of Y would fall below P;. X would not rise to P, however, because of the dampening off of Y's rate of growth, and would settle, let us say, at P;,. The return to Y in turn would not be equal to P; but would, instead, be something less than this amount but more than P; and would be fixed at Ps. The ultimate result will, therefore, be that X will secure a greater proportionate return per unit than the increase in the total effectiveness of industry, while Y will secure a lesser unit increase. It is not conclusively demonstrable by graphic methods alone whether X as a whole will secure a larger share of the total product than before, or whether the greater number of units of Y which have been supplied will be more than sufficient to offset the lesser increase per unit. From mathematical illustra- tions, which have been worked out by my associate, Mr. 3. W. Wilcox, however, it is apparent that under the assump-

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