Alfred Marshall (1842-1924) And Marshallism Economics.

Alfred Marshall contributed the following thoughts to economic science vide his Principles of Economics:

  • The general theory of economic equilibrium in which all the elements of the economic world are kept in their places by mutual counterpoise and interaction, a theory, strengthened by two subsidiary concepts- the “margin” and “substitution”

  • The distinction between “ external” and “internal” economics

  • The doctrine  “normal profit” assisted by the concept of “quasi-rent” and the representative firm”

  • The concept of consumer’s surplus

  • The introduction of the idea of elasticity

  • Clarification of the respective roles played by demand and by costs of production in the determination of value

  • The explicit introduction of the element of time as a factor in economic analysis, with the concepts of the “short” and “long” period

  • Proof that laissez-faire regarded as a principle of maximum social advantage breaks down in certain conditions theoretically and more merely practically; and

  • An examination of the effects of monopoly.

Note that the Marshallian Demand curve is the most widely used demand curve in which the responsiveness of quantity demanded to price incorporates both the income effect and the substitution effect.

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