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Transcript of Alfred Marshall
design by Dóri Sirály for Prezi
British economist from the 1800s - 1900s
Born 26th July, 1842, died 13th July, 1924
Born in London
Died in Cambridge, England
Studied at St. John's College, Cambridge
Became a professor at Cambridge after receiving a fellowship in 1865 - taught political economy
Also taught at Balliol College, Oxford - 1883 to 1885
Published first edition of his most successful book,
Some Lasting Ideas
"Principles of Economics" (volume 1) published in 1890
Most important book
Supply and demand
created the standard supply and demand graph
Consumer surplus (created by Jules Depuit, publicized by Marshall)
The 3 periods
Retired in 1908
"Principles of Economics" (volume 1)
In the 1880s:
- The second industrial revolution
- "The period from 1870 to 1890 saw the greatest increase in economic growth in such a short period as ever in previous history" (5)
- Lots more consumerism
"The branch of economics that analyzes the market behavior of individual consumers and firms in an attempt to understand the decision-making process of firms and households" (2)
The smaller picture
Supply and demand
Supply and Demand (+Graphs)
Quantity - the amount of a product/service that is
wanted by consumers - at a specific price
higher the price, lower the
amount of product/service
wanted by consumers
- downward slope on graph
Quantity - the amount the market is willing to give - again, at a specific price
Greater price, more of that product/service given - upwards slope
Supply and Demand Graph -
Shows the ideal/equal distribution of goods at the equilibrium (the crossing point)!
"Difference between the price a consumer pays for an item and the price he would be willing to pay rather than do without it (the market price)" (9)
"The price and output of a good are determined by both supply and demand: the two curves are like scissor blades that intersect at the equilibrium" (1)
The 3 Periods
Marshall defined 3 periods to look at how markets acclimatize to changes in demand/supply over a period of time:
1) First Period - Market Period
2) Second Period - Short Period
3) Third Period - Long Period
1) Market Period
- How long the product is at the starting price
2) Short Period
- The time when the number of a certain product is being increased through labour or other methods
- There is no more capital being invested
3) Long Period
- The time it takes for there to be a need for the increase in capital to uphold/continue to production of a good
E.g.: iPad3 introduced at $600. As long as the price of the iPad3 is at $600, this is the Market Period
E.g.: the production of the iPad3 is being increased by 200 iPads every month, but there is no increase in capital.
E.g.: It takes 3 months from the release of the iPad3 before capital must be increased in order to uphold the production of the iPad3s.
How have these ideas played a role in our current world?
All of these ideas are still used today
- Marshall was the father of modern economics - his ideas have shaped economists after him and they are still present now - lots of our economic ideas are from him!
- Consumer surplus is still prevalent today
- The 3 periods theory is still used to observe the impact of changing supply/demand in the market
- Supply and Demand are a fundamental concept of economics - it is the second chapter in our textbook!
- Marshall is buried in the Ascension Parish Burial Ground
- Marshall has a library at the University of Cambridge named after him: "The Marshall Library of Economics"
- 1890-1924 - Known as the "respected father of the economic profession"
- For 50 years after, was known as the "venerable grandfather"
As a consumer - you want your price to be higher than the market price - you get a deal!
- Your price: $700 for an iPad3, market price: $600
As the market - market wants their price to be higher than the consumer's price - they get the deal! (As balanced as possible - not too high, not too low - or it won't sell)
- Market price: $600 for an iPad2, $500 for
He defined neoclassical economics
(supply and demand)
"His most important legacy was creating a respected, academic, scientifically founded profession for economists in the future that set the tone of the field for the remainder of the 20th century." (3)