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 question.
 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 absolute
 changes are of course the same. Our formula in other words
Joes not meet the reversal test. The Marshallian formula therefore
 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.