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Marshall, Alfred

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Marshall, Alfred

(1842–1924) an English economist who depicted precise mathematical relationships between economic variables in his textbook Principles of Economics (1890). Using calculus, Marshall was able to show how value is partly determined by the MARGINAL UTILITY of a good and how the intensity of wants decreases with each unit acquired. Thus, Marshall was able to explain the PARADOX OF VALUE, showing how luxuries like diamonds have a higher price than essentials like water because consumers have few diamonds while water is generally plentiful. This analysis enabled Marshall to explain downward-sloping DEMAND CURVES and CONSUMER SURPLUS (the surplus satisfaction derived by a consumer whenever he can buy a good at a lower price than that which he would be prepared to pay rather than go without the good). Marshall also developed the concept of ELASTICITY OF DEMAND.

Marshall argued that the forces of both demand and supply determine value, with demand determining price and output in the short run and changes in resource inputs and production costs influencing price in the long run. He suggested that supply prices would depend upon production costs and in analysing short-run production cost showed how the marginal product of all resources tends to diminish as variable factor inputs are combined with fixed amounts of other resources (DIMINISHING RETURNS to the variable factor input). In the long run, Marshall suggested that industries would experience reducing costs and prices because of ECONOMIES OF SCALE resulting from greater specialization. See REPRESENTATIVE FIRM.

Collins Dictionary of Economics, 4th ed. © C. Pass, B. Lowes, L. Davies 2005
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Alfred Marshall, in his discussion of supply and demand and a money-based theory of utility, was also skeptical of mechanical explanations of economic change.
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Consisting of four biographical essays about Alfred Marshall, a "great economist and flawed human being," Coase shows his keen interest in historical accuracy in setting the record straight on Marshall as depicted in such sources as the Collected Writings of John Maynard Keynes.
Frank and Cook admit that "the widening gap between winners and losers is apparently not new," and they quote the British economist Alfred Marshall, writing in 1890: "There never was a time at which moderately good oil paintings sold more cheaply than now, and there never was a time at which first-rate paintings sold so dearly." Markets have always rewarded the best with a premium.
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He argues that Keynes was influenced by the economic theories of Alfred Marshall. Acknowledging that this is all well known, Cristiano claims that his book does 'innovate' in several ways, for example, by showing that 'Keynes's early political thought was more complex than suggested by any ready-made formula' (p.
Economics scholars from across the globe discuss the nineteenth-century background; the ideas of Adam Smith, Adolph Lowe, Karl Marx, Francois Quesnay, Alfred Marshall, John Maynard Keynes, and other thinkers; and topics such as option-pricing theory, the history of the field, the critical economic systems approach, the sociology of economic knowledge, Say's Law, class and monopoly, productivity growth and inflation, and the lives and contributions of some of the Nobel Laureates to the field.
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