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 115 divergent rates of change in the total product which follow an alteration in the physical quantity of the factors, may be so equated as to be reduced to a common function. How, in other words, can the production of potatoes, copper ore, loaves of bread, and neckties be reduced to common units in which we have different technical coefficients of production? This, however, can be effected by computing index numbers of production in which the quantities of each product, weighted by their values, are reduced to relatives. If the change is to be studied over a period of time, this general index of production, similar to those constructed by the Federal Reserve Board and the Harvard Com- mittee on Economic Research, will measure sufficiently well what we desire. And if it be objected that the relative values will change from year to year and that consequently an index based on fixed weights will be wrong, it can be shown that Professor Irving Fisher has eliminated this difficulty in his “ideal” index number where he commends the use of the geometrical average of the index of a commodity in a given year weighted by its value in the base year multipled by the index for the given year weighted by the values of the given year. In this way a satisfactory physical index of general production can be secured to measure the physical effects of altered quantities of the factors. Within these physical outputs, of course, produec- tivity will be measured in terms of value, but for the society as a whole we can measure fairly accurately the productivity as a whole. Even here, however, there will be difficulties in taking into account (1) the relative degree of fabrication in manufacturing at different intervals, and (2) the relative amount of services supplied at differing periods. 3. The relative amount of labor, capital and imputed services of natural resources which are contained in the commodities upon which laborers expend their wages as compared with the relative quantities of these factors which are consumed by the recipients of interest and of rent, also affects the final apportionment, of the product to the factors of production. It is important therefore, to trace the effects of consumption as well as of pro- * See Fisher, The Making of Index Numbers (1st edition), p. 482. The formula is: V Zqipe Zqip, — ¥ s——— Sqpe ZqQop:

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