econ434notes18

econ434notes18 - basics of the theory of marginal...

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
History of Economic Doctrines Lecture 18 Neoclassical Economics II Hermann Heinrich von Gössen H.H. von Gössen [1810-1858], in his Development of the Laws of Human Relationships (1854), claimed that relative price can be better explained by the forces of marginal utility. Gössen’s First Law – idea of diminishing marginal utility Gössen’s Second Law – consumers maximize their total utility when MU A /P A =MU B /P B =MU C /P C Gössen’s Third Law – a good only has value when its demand exceeds its supply Johann Heinrich von Thünen Being a landlord, J.H. von Thünen [1780-1850] applied marginal analysis to develop some
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: basics of the theory of marginal productivity in his model of agricultural land. In the various editions of his The Isolated State (1826-1863), von Thünen concluded that, holding yield constant, the amount farmers willing to pay for a piece of land falls with increasing distance from the market. Thus, location determines rent. (Note: August Losch also worked on the economics of location and concluded that the distance-minimizing geometric shape of the territories most firms control when concentrated in a high traffic area for business is hexagonal.)...
View Full Document

This note was uploaded on 01/12/2010 for the course ECON 434 taught by Professor Byrns during the Spring '09 term at UNC.

Ask a homework question - tutors are online