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econ434notes19a - English Marginalism William Stanley...

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English Marginalism William Stanley Jevons – (1835 – 1882) – assisted Menger and Walras in launching the Marginalist Revolution that would eventually lead to the birth of neoclassical economics. Jevons promoted the concept that logical problems can be resolved exactly like equations in algebra by making the statements symbolic and then substituting elements with similar properties. Outlined the principle of diminishing marginal utility and related it to the equimarginal principle. Also introduced the disutility of labor theory and the time- dependent theory of capital. -Heavy contributions to macroeconomic theory, business cycle theory, supply and demand, utility - price determined by demand, if profit exists, more would be produced in the future. - found that once produced P = demand Nassau William Senior – (1790 – 1864) - Senior can be credited with the introduction of the utility-based demand and the cost of production-based supply scheme into economic thought in Great Britain. Became an important influence on the Marginalist Revolution. Major Work: An Outline of the Science of Political Economy , 1836. Supporter of laissez- faire, famously opposed to trade unions and reductions in labor hours. More Notes:
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Migration of Marginalism into England: Began with W.S. Jevons - Mathematician - Loved the concept of marginal utility - Cost doesn’t determine price o Sunk cost fallacy: if we pay attention to what happened, and then we base our prices on that, then we will end up with a mess Aside : Soldiers who die in war don’t necessitate that we finish war. Staying in war won’t change status as dead. - Claim to fame: Marginal utility determining consumption behavior o Law of Equal Marginal Advantage To optimize profit or utility, every resource should be expended in a way that at the margin, equal units of that resource generate equal profits or equal utility. MUa/Pa = MUb/Pb MUa/MUb = Pa/Pb Example: Price of apples relative to price of bananas.
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econ434notes19a - English Marginalism William Stanley...

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