The Law of Demand 65 



the amount demanded to the small relative change in 

 the price. Or, more definitely, if "a fall of 1 per cent, 

 in price would cause an increase of 2 per cent, in the 

 amount demanded, the elasticity of demand would be 

 two;" if "a fall of 1 per cent, in price would cause an 

 increase of l / 3 per cent, in the amount demanded, the 

 elasticity of demand would be one-third; and so on." l 

 It will be observed that the theory of elasticity of 

 demand in this classical form is presented from the 

 point of view of infinitesimal changes in the two va- 

 riables , price and commodity demanded. It gives 

 the degree of elasticity of demand for a point in time, 

 for a given state of the market assuming all other 

 things to remain the same ; and for this reason it may be 

 said to treat of elasticity of demand from a statical 

 point of view. But this is not its most serious limitation. 

 It postulates a knowledge of the demand curve, and 

 while it gives an exposition of the method by which the 

 degree of elasticity of demand might be determined 

 provided the demand curve were known, there have 

 been grave doubts as to whether the practical difficulty 

 of deriving the demand curve would ever be overcome. 



The problem before us is to derive the demand curve 

 from statistics; to measure the degree in which it is an 

 accurate description of the changes of actual industry; 

 and to give the numerical coefficients of elasticity of 

 demand for typical commodities. 



1 Marshall: Principles of Economics, 4th edit., pp. 177-178, 

 note. 



