Economics Dictionary of ArgumentsHome
| |||
|
| |||
| Elasticity: In economics, elasticity is a measure of the response of one variable to a change in another variable. For example, the price elasticity of demand is a measure of how the demand for a good or service changes when the price changes. Elasticity is expressed as a percentage. An elasticity of 1 means that one variable reacts proportionally to the other variable. An elasticity of less than 1 means that one variable reacts less strongly than the other variable. Elasticity can help to understand the sensitivity of consumers and producers to market fluctuations. See also Price, Markets, Demand, Supply._____________Annotation: The above characterizations of concepts are neither definitions nor exhausting presentations of problems related to them. Instead, they are intended to give a short introduction to the contributions below. – Lexicon of Arguments. | |||
| Author | Concept | Summary/Quotes | Sources |
|---|---|---|---|
|
Murray N. Rothbard on Elasticity (Economics) - Dictionary of Arguments
Rothbard III 127 Elasticity/demand/Rothbard: A striking feature of the total outlay curve ((s) of buyers and sellers) is that, in contrast to the other curves (such as the demand curve), it can slope in either direction as the price increases or decreases. The possibility of a slope in either direction stems from the operation of the two factors determining the position of the curve. Outlay = Price × Quantity Demanded (of purchase good). But we know that as the price decreases, the demand must either increase or remain the same. Therefore, a decrease in price tends to be counteracted by an increase in quantity, and, as a result, the total outlay of the sale good may either increase or decrease as the price changes. Def Elastic/: For any two prices, we may compare the total outlay of the sale good that will be expended by buyers. If the lower price yields a greater total outlay than the higher price, the total outlay curve is defined as being elastic over that range. Def Inelastic: If the lower price yields a lower total outlay than the higher price, then the curve is inelastic over that range. Rothbard III 129 Any two prices on the schedule may be compared. It is evident that an examination of the entire outlay curve demonstrates that the foregoing demand curve is basically elastic. It is elastic over most of its range, with the exception of a few small gaps. If we compare any two rather widely spaced prices, it is evident that the outlay is less at the higher price. If the price is high enough, the demand for any good will dwindle to zero, and therefore the outlay will dwindle to zero. Demand/supply: Contrary to what might be thought at first, the concept of “elasticity of supply” is not a meaningful one, as is “elasticity of demand.” Rothbard III 130 The reason is that its other determinant, quantity supplied, changes in the same direction as the price, not in the inverse direction as does quantity demanded. As a result, supply is always “elastic,” and the concept is an uninteresting one.(1) Rothbard III 406 Elasticity/service/factors of production/Rothbard: Labor services are also likely to be inelastic with respect to the interest discount, but probably less so than land, since labor has a reservation demand, a subjective use-value, even in the aggregate labor market. This special reservation demand stems from the value of leisure as a consumers’ good. Higher prices for labor services will induce more units of labor to enter the market, while lower prices will increase the relative advantages of leisure. Here again, however, the difference that will be made by relatively large changes in the interest rate will not be at all great, so that the aggregate supply-of-labor curve (or rather curves, one for each homogeneous labor factor) will tend to be inelastic with regard to the interest rate. >Factors of production/Rothbard, >Interest rates/Rothbard, >Production/Rothbard, >Production structure/Rothbard. Capitalism/Rothbard: It is true that capitalists, after investing in a stage of production, demand present goods in exchange for their product. This particular demand is inelastic in relation to interest changes since these capital goods also can have no subjective use-value for their producers. This demand, however, is strictly derivative and dependent. In the first place, the product for which the owner demands present goods is, of course, a future good, but it is also one stage less distantly future than the goods that the owner purchased in order to produce it. >Capitalism/Rothbard. 1. The attention of some writers to the elasticity of supply stems from an erroneous approach to the entire analysis of utility, supply, and demand. They assume that it is possible to treat human action in terms of "infinitely small" differences, and therefore to apply the mathematically elegant concepts of the calculus, etc., to economic problems. Such a treatment is fallacious and misleading, however, since human action must treat all matters only in terms of discrete steps. If, for example, the utility of x is so little smaller than the utility of Ythat it can be regarded as identical or negligibly different, then human action will treat them as such, i.e., as the same good. Because it is conceptually impossible to measure utility, even the drawing of continuous utility curves is pernicious. (…)_____________Explanation of symbols: Roman numerals indicate the source, arabic numerals indicate the page number. The corresponding books are indicated on the right hand side. ((s)…): Comment by the sender of the contribution. Translations: Dictionary of Arguments The note [Concept/Author], [Author1]Vs[Author2] or [Author]Vs[term] resp. "problem:"/"solution:", "old:"/"new:" and "thesis:" is an addition from the Dictionary of Arguments. If a German edition is specified, the page numbers refer to this edition. |
Rothbard II Murray N. Rothbard Classical Economics. An Austrian Perspective on the History of Economic Thought. Cheltenham, UK: Edward Elgar Publishing. Cheltenham 1995 Rothbard III Murray N. Rothbard Man, Economy and State with Power and Market. Study Edition Auburn, Alabama 1962, 1970, 2009 Rothbard IV Murray N. Rothbard The Essential von Mises Auburn, Alabama 1988 Rothbard V Murray N. Rothbard Power and Market: Government and the Economy Kansas City 1977 |
||
> Counter arguments against Rothbard
> Counter arguments in relation to Elasticity (Economics)
Authors A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
Concepts A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
