Alfred marshall biography

Alfred marshall contribution to economics pdf

A lfred Marshall was the dominant figure in British economics itself dominant in world economics from about until his death in His specialty was microeconomics —the study of individual markets and industries, as opposed to the study of the whole economy. In his most important book, Principles of Economics , Marshall emphasized that the price and output of a good are determined by both supply and demand: the two curves are like scissor blades that intersect at equilibrium.

Modern economists trying to understand why the price of a good changes still start by looking for factors that may have shifted demand or supply, an approach they owe to Marshall. He noted that the price is typically the same for each unit of a commodity that a consumer buys, but the value to the consumer of each additional unit declines.

A consumer will buy units up to the point where the marginal value equals the price. Therefore, on all units previous to the last one, the consumer reaps a benefit by paying less than the value of the good to himself. This difference is called the consumer surplus, for the surplus value or utility enjoyed by consumers. Marshall also introduced the concept of producer surplus, the amount the producer is actually paid minus the amount that he would willingly accept.

Marshall used these concepts to measure the changes in well-being from government policies such as taxation. Wanting to understand how markets adjust to changes in supply or demand over time, Marshall introduced the idea of three periods. First is the market period, the amount of time for which the stock of a commodity is fixed.