104 ECONOMIC ESSAYS IN HONOR OF JOHN BATES CLARK
from A towards B. But the supply will not fall to B because
as it moves towards this point, marginal productivity will
rise and this will break the force of the fall. It cannot return
to A however, because of the initial change in quantities which
the moving of the supply curve of X to the left effected. The
point of new equilibrium will therefore be when B quantities of
X and approximately C quantities of Y will be supplied, and
with a unit return to Y of Ps; and to X of Ps. The factor X
would therefore have enhanced its former return per unit while
Y would lose, but the losses and the gains would not be as great
as when Y as well as X was completely inelastic.
Let us now assume (Figure 19) that the initial elasticities of
the supply curves of both X and Y are 1.0 and that they are both
represented by the curve 8, and that the supply of the two
factors originally offered
was that represented by A
with the rate of payment
P or AS. X now secures
added bargaining strength
and its elasticity decreases
from 1.0 to .9, and the
new supply curve being
represented by X; so that
at the price P, only B in-
stead of A units as before
are offered. This sets into
motion the familiar train
of consequences. But as
a result of the marginal
productivity of X rising
to P; the supply of X will expand while that of Y will contract.
There will thus be a double force at work to restore the original
equilibrium. The combined movement will restore the ultimate
marginal productivities of each factor nearer the original equi-
librium than was the case when we were dealing with 1.0 and
sero elasticities. But it will not completely restore it since the
fact that the elasticity of X was .9 will mean that the supply of
this factor will not increase as rapidly as a result of its increase in
remuneration as that of Y will decrease. The effect of the initial
change in elasticities will therefore not be completely removed.
There will be some change in the ultimate amounts paid for units
R
