Alfred Marshall (1842 - 1924)

Presented by: Ankita Meshram Akshata Chavan Harsh Shah Anish Sanghvi

Biography
Marshall was born on July 26, 1842 into middle - class family in Clapham, England.
Marshall grew up in the London suburb of Clapham and was educated at the Merchant Taylors' School and St John's College, Cambridge Marshall was elected in 1865 to a fellowship at St John's College at Cambridge, and became lecturer in the moral sciences in 1868. In 1877, Marshall married to Mary Paley. In 1885, he became professor of political economy at Cambridge where he remained until his retirement in 1908.

 Marshall defined economics as the study of mankind in the ordinary business of life; it examines that part of individual and social action which is most closely connected with the attainment and use of the material requisites of well-being. Marshalls overriding motivation for doing economics was to improve the condition of the common people.
Marshall s works: Principles of Economics (1980) Industry and Trade (1919) Money, Credit and Commerce (1923) Pure Theory of Foreign Trade and Pure Theory of Domestic Values (1879) Economics of Industry (1879)

Law Of Demand
Statement of Law: Other things being equal, the quantity demanded increases with a fall in price and diminishes with a rise in price . D = F(P)

Demand Schedule
Price of Mangoes Per Kg (Rs) 50 40 30 20 10 Demand (Kg)
1 2 3 4 5

Demand Curve

Law Of Supply
The law explains the functional relationship between the price and quantity supplied. Statement of Law: Other things being equal, a larger quantity will be offered for sale at a higher price, than at a lower price .

Supply Schedule
Price (RS) (Per unit) 10 20 30 40 50 Quantity Supplied (in units) 100 200 300 400 500

Supply Curve

Theory of Production
Four different periods of production: Market period
Short run period Long run period

Secular period

Laws of return in short run

Law of diminishing returns

Principle of substitution

Laws of return in the long run

Constant returns
Increasing returns

Diminishing returns
External & Internal economies

Theory Of Price Determination (Market Equilibrium)

General approach:-

General Theory of price identifies the forces that help in determination of equilibrium price. Price determination is the key concept in micro economic theory.

Marshalls approach
Marshall said : When the demand price is equal to the supply price, the amount produced has no tendency either to be increased or decreased, it is in Equilibrium. Equilibrium is where the Demand Curve intersects the Supply Curve.

(Slide 3)

Basic Assumptions of Equilibrium : Demand curve should always have a negative slope. Supply curve should always have a positive slope. If demand increases more than supply, price will increase and if supply increases more than demand price will decrease. Joint Demand: When the two commodities are complimentary to one another, they maybe jointly demanded. A change in demand for one commodity will bring about a similar change in demand for the other commodity. Similarly, change in supply of one brings about a similar change in the supply of the other commodity.

In a nutshell

1890 replaced Mills text Founder of standard microeconomics Continual refinement of economic system Did not write theories for theories sake