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

82 ECONOMIC ESSAYS IN HONOR OF JOHN BATES CLARK tive supply curve an increase in price is accompanied by an increase in the quantity supplied and a reduction in price is accompanied by a decrease in the quantity supplied. The negative supply curve PP, on the other hand, represents a supply schedule where the higher the price the less is supplied and where with a reduction in price more is offered. Elasticity of supply is the relative change in quantity supplied which accompanies a relative change in price. Virtually the same formula which Marshall? used to measure the elasticity of demand can be applied to measure the elasticity of supply. We may then write this formula: aX X B= 7 3P ED Where E—elasticity of supply X—quantity of factor (or commodity) offered P—price per unit d-=the symbol to designate a differential, in this case an infinitesimal difference in X or P. While both dX and dP approach zero as a limit, the ratio Sis in general not equal to zero. In the examples immediately following it has been assumed that a change of one per cent may be considered to repre- sent an infinitesimal change with sufficient accuracy for the purpose in hand. mE If we may be pardoned then an example based on finite differ- ences let us assume that in a given economy the price of labor ! This manuscript was printed while Professor Douglas was in Russia. At the time that the undersigned was asked to see it through the press it had been advanced to the galley stage with all the plates of the figures made. Certain corrections that otherwise would have been made must be left to the indulgence of the reader. Wherever (as in Figure 3) supply curves are shown as straight lines and yet as having constant elasticities other than 0, +1 or oc it follows that the figure is on a double logarithmic scale. The part of the plate that looks like a zero origin with axes running through it must not be so interpreted. In all the plates having two supply curves the intitial state of equilibrium should be represented by two points instead of one—S. W. W. 2 Marshall, Principles of Economics (6th edit), p. 839. Marshall's formula for the elasticity of a demand curve has a negative sign.

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