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 posulated
 by the Malthusians
for labor and by the later
members of the classical
school for capital. This,
with some modifications,’
represents Taussig’s concept
 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 increase
 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 negative
 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.