ABSTRACT
§1. The statements of modem economists regarding elasticities of demand or supply sometimes contain an ambiguity, which it is the purpose of this Note to examine. This ambiguity is liable to arise, whenever it is attempted to apply the methods of the differential calculus to problems of demand or supply. In Marshall’s Principles, elasticity of demand is defined as follows (p. 102) : “We may say generally : the elasticity of demand in a market is great or small according as the amount demanded increases much or little for a given fall in price.” This conception is then developed in a footnote, with the aid of a diagram, as follows: “Speaking more exactly we may say that the elasticity of demand is one, if a fall of one per cent, in price will make an increase of one per cent, in the amount demanded ; that it is two or a half, if a fall of one per cent, in price makes an increase of two or one-half per cent, respectively in the amount demanded. The elasticity of demand can be best traced in the demand curve with the aid of the following rule :— https://s3-euw1-ap-pe-df-pch-content-public-p.s3.eu-west-1.amazonaws.com/9780203708606/5e6d551a-7869-43ca-b966-e72ffaab495c/content/figu5a_1_B.tif" xmlns:xlink="https://www.w3.org/1999/xlink"/>
