Economic essays

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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

84 ECONOMIC ESSAYS IN HONOR OF JOHN BATES CLARK schedules, but in the case of positive supply curves an increase in price will always mean a greater and a decreased price a lesser total outlay upon the commodity or factor in ques- tion. Thus in the case of an increase not only will each of the units formerly supplied receive more than before, but the new units which have presented themselves will each receive the old price plus the increase which has occurred. It should be realized however that the formula given above is only adapted for measuring the elasticity of demand where the changes in quantities are infinitesimal. It does not meet the situation where finite changes occur. Thus if an increase in price from 50 cents to $1.00 per hour causes an increase in the quantity of labor offered of from 1000 to 1600 hours, then the coefficient of elasticity would seem to be 600 1000 »n Als 600 x 50 30000 1000 x 50 50000 50 But if we reckon the elasticity from $1.00 backwards, then —-600 1600 50 100 We secure then two differing coefficients depending upon whether we compute in terms of increases or decreases, although the abso- lute changes are of course the same. Our formula in other words Joes not meet the reversal test. The Marshallian formula there- fore does measure elasticity at a given point, but as Dalton has pointed out,* it does not measure in itself arc elasticity, or the elasticity between two points. By using the midpoint as the point of reference we can secure an approximation that meets the reversal test though at the cost of not necessarily having our point of reference lie on the curve. thus: . Hugh Dalton, The Inequality of Incomes, pp. 192-97.

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