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Alfred Marshall(1842 - 1924)

Presented by:

Ankita Meshram

Akshata Chavan

Harsh Shah

Anish Sanghvi

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Biography

Marshall was born on July 26, 1842 into middle - classfamily in Clapham, England.

Marshall grew up in the London suburb of Clapham and

was educated at the Merchant Taylors' School and StJohn's College, Cambridge

Marshall was elected in 1865 to a fellowship at St John'sCollege at Cambridge, and became lecturer in the moralsciences in 1868.

In 1877, Marshall married to Mary Paley.

In 1885, he became professor of political economy atCambridge where he remained until his retirement in 1908.

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Marshall defined economics as the study of mankind in theordinary business of life; it examines that part of individual and socialaction which is most closely connected with the attainment and use ofthe material requisites of well-being.

Marshalls overriding motivation for doing economics was toimprove 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)

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Law Of Demand

Statement of Law: Other things being equal, the quantitydemanded increases with a fall in price and diminishes witha rise in price .

D = F(P)

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Demand Schedule

Price of MangoesPer Kg (Rs)

Demand (Kg)

50 1

40 2

30 3

20 4

10 5

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Law Of Supply

The law explains the functional relationship between the priceand quantity supplied.

Statement of Law: Other things being equal, a larger

quantity will be offered for sale at a higher price, than at alower price .

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Supply Schedule

Price (RS)(Per unit)

Quantity Supplied(in units)

10 100

20 200

30 300

40 400

50 500

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Supply Curve

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Theory of Production

Four different periods of production:

Market period

Short run period

Long run period

Secular period

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Laws of return in short run

Law of diminishing returns

Principle of substitution

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Laws of return in the long run

Constant returns

Increasing returns

Diminishing returns

External & Internal economies

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Theory Of Price Determination (MarketEquilibrium)

General approach:-

General Theory of price identifies the forces that help indetermination of equilibrium price. Price determination

is the key concept in micro economic theory.

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Marshalls approach

Marshall said : When the demand price is equal tothe supply price, the amount produced has notendency either to be increased or decreased, it is inEquilibrium.

Equilibrium is where the Demand Curve intersectsthe Supply Curve.

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(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 willincrease and if supply increases more than demand pricewill decrease.

Joint Demand:

When the two commodities are complimentary to oneanother, they maybe jointly demanded. A change indemand for one commodity will bring about a similarchange in demand for the other commodity. Similarly,change in supply of one brings about a similar change inthe supply of the other commodity.

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In a nutshell

1890 replaced Mills text

Founder of standard microeconomics

Continual refinement of economic system

Did not write theories for theories sake

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