84 Economic Cycles: Their Law and Cause 



for oats and for potatoes are respectively, .84 and 

 -.66. 



In obtaining these numerical values for the coefficient 

 of elasticity, the laws of demand for the respective 

 crops have been assumed to be parabolas of the third 

 order. If the linear laws of demand had been taken for 

 the purpose, the coefficients of elasticity would have 

 been different. For example, the law of demand 

 for corn see Figure 16 is y = .8896z+7.79 which 



would give ^ = -.8896, or ^ = -1.12, whereas the 



coefficient was .92 in case of the more complex curve. 

 This discrepancy between the results when different 

 types of curves are used for the demand curve shows the 

 need of care in drawing conclusions that are based upon 

 numerical values of the coefficient of elasticity. The 

 discrepancy does not invalidate the method. When 

 different measures of degrees of elasticity are afforded 

 by different types of curves, there is a perfectly satis- 

 factory criterion which makes it possible to decide 

 between different coefficients of elasticity: The coeffi- 

 cient is to be preferred which is deduced from the de- 

 mand curve that fits the data with the highest degree of 

 probability. The demand curve that fits best the data 

 affords the best measure of the degree of elasticity of 

 demand. 



The conclusions of this chapter may be briefly sum- 

 marized. In the closing quarter of the last century 

 great hopes were entertained by economists with 

 regard to the capacity of economics to be made an 



