Elasticities Versus Slopes
The outcomes of the cobweb model are stated above in terms of slopes, but they are more commonly described in terms of elasticities. In terms of slopes, the convergent case requires that the slope of the supply curve be greater than the absolute value of the slope of the demand curve:
In standard terminology from microeconomics, define the elasticity of supply as, and the elasticity of demand as . If we evaluate these two elasticities at the equilibrium point, that is and, then we see that the convergent case requires
whereas the divergent case requires
In words, the convergent case occurs when the demand curve is more elastic than the supply curve, at the equilibrium point. The divergent case occurs when the supply curve is more elastic than the demand curve, at the equilibrium point (see Kaldor, 1934, page 135, propositions (i) and (ii).)
Read more about this topic: Cobweb Model
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