ELASTICITY OF SUPPLY AS A DETERMINANT OF DISTRIBUTION 81 
be that postulated by the bargain theorists is represented in 
Figure 1; namely, a straight line perpendicular to the base and 
parallel to the price axis. 
Here the supply will be 
the same, irrespective of 
whether the price is P, Py, 
P,, ete. 
Figure 2 represents a 
supply curve of infinite 
elasticity which was posu- 
lated by the Malthusians 
for labor and by the later 
members of the classical 
school for capital. This, 
with some modifications,’ 
represents Taussig’s con- 
cept of the supply curve 
for capital. A virtually 
unlimited number of the units of a given factor will be produced 
at the return P. It is thus identical with production under 
constant cost. If the rate 
of return rises above P, the 
supply will expand almost 
indefinitely until the in- 
crease of that factor may 
bring the return to this 
factor back to its original 
point P. Similarly, if the 
return should fall below P, 
then the supply would 
dwindle away to almost 
nothing, being checked 
only by the fact that so 
rapid a decrease would 
cause its unit return to 
rise and when it had 
reached P, the contraction would cease. 
We should also note the difference between positive and nega- 
tive supply curves which are shown in Figure 3. With a posi- 
D 
! Taussig’s assumed curve permits of a fraction of the total supply 
being saved at less than the broad margin.