300 THE GENERAL THEORY OF EMPLOYMENT bk. v

unit of output, we shall have increasing marginal primecosts over and above any increase due to increasinglabour-costs.

Hence, in general, supply price will increase asoutput from a given equipment is increased. Thusincreasing output will be associated with rising prices,apart from any change in the wage-unit.

(3) Under (2) we have been contemplating thepossibility of supply being imperfectly elastic. If thereis a perfect balance in the respective quantities of special-ised unemployed resources, the point of full employ-ment will be reached for all of them simultaneously.But, in general, the demand for some services andcommodities will reach a level beyond which theirsupply is, for the time being, perfectly inelastic, whilstin other directions there is still a substantial surplusof resources without employment. Thus as outputincreases, a series of “bottle-necks” will be successivelyreached, where the supply of particular commoditiesceases to be elastic and their prices have to rise towhatever level is necessary to divert demand into otherdirections.

It is probable that the general level of prices willnot rise very much as output increases, so long as thereare available efficient unemployed resources of everytype. But as soon as output has increased sufficientlyto begin to reach the “bottle-necks”, there is likely tobe a sharp rise in the prices of certain commodities.

Under this heading, however, as also under heading(2), the elasticity of supply partly depends on the elapseof time. If we assume a sufficient interval for thequantity of equipment itself to change, the elasticitiesof supply will be decidedly greater eventually. Thusa moderate change in effective demand, coming on asituation where there is widespread unemployment,may spend itself very little in raising prices and mainlyin increasing employment; whilst a larger change,which, being unforeseen, causes some temporary