Essay, Pages 6 (1458 words)
This article is devoted to the study of the contribution of Alfred Marshall to development economic theory as a science, in particular the consideration of the so-called “Cross” Marshall “, which is still one of the main models of study economic equilibrium and pricing process, and economic theory in the whole.
Alfred Marshall (1842-1924) – the largest representative of neoclassical direction, which is known as the author of the theory of market equilibrium in the process pricing. His contribution to the development and development of new methods for studying various
economic relations, because its importance for economic science is no is overrated.
Many of his ideas formed the basis for many sections of modern economic theory.
During his life A. Marshall published about 80 works devoted to the study problems and factors affecting economic processes. Among his most famous works are such works as “Economics of Industry”, “Industry and trade, “” Money, credit and trade, “” Principles of political economy ” In 1890, he published his main work “Principles of Economic Science”, which was republished for many years and served as the main source for the study economic theory in many leading Western countries.
In his work he tried combine labor theory of value and cost theory of production with theory marginal utility. Introduced the concept of “equilibrium price”, which meant that this price, established by the market in which supply and demand find a compromise between themselves.
A mutual arrangement of the demand and supply curves relative to the price difference level in the process of market interactions, now called “Cross (scissors) Marshall, “lies at the basis of modern economic theory and is the main a graphic model used in the study of the interaction of supply and demand in the process of economic relations.
And in the article I want to focus on his research.
As mentioned earlier, the Marshall Cross in the economy is a graphic model used in the economy to describe the interaction of market participants in honey and the notation of the ratio of demand and supply curves to changes prices in the context of the development of economic relations (the point of intersection of the demand curves and proposal is the very moment during which a market price quilibrium).
Market mechanisms, acting in conditions of perfect competition, establish dependence of the level of demand and supply on the price. At the same time, the price depends on a balanced ratio of “demand prices” and “supply prices”. And that’s why Marshall, in studying the mechanisms of market equilibrium, built his theory on the basis of this ratio of prices. The “demand price” is determined by the utility of the product and is the maximum level the price at which it is ready to purchase a product or service.
The minimum price level at which the seller will sell a sale own goods or provide services. And the so-called “equilibrium price” determines the moment of coincidence of interests and opportunities of both sides – participants in economic interaction. It is in this time to the manufacturer and the consumer can maximize the overall utility and minimize costs.
The theory of Marshall is called the theory of partial equilibrium, since the establishment equilibrium price is possible only at the firm level, i.e. at the microlevel. Costs Marshall’s production is defined as effort and sacrifice, both on the part of the worker and and the capitalist, which are inevitable in the process of producing goods. According to Marshall, negative emotions associated with production arise and worker, who constantly performs this or that work, and the capitalist, to whom this work worker.
They have a worker in: Waste of working capacity and forces; refusing to have a pleasant pastime; the severity of labor, and other unpleasant feelings that accompany him.
The capitalist’s main negative emotions are due to the fact that he should not most of the profit (income), and invest in production with a risk for yourself. The demand for final products is determined by such factors of production – rent, salary, profit. But the prices of these factors themselves determine consumer demand, because they form the income of the population. Marshall was the one who tried to solve this problem. He looked at her with the other side.
Rent, salary, profit is really income of different groups of the population. But This is also a component of the cost of production.
It turns out that the costs still, albeit indirectly, but affect the demand. But at the same time they directly affect the market supply. This is obvious, because the higher the costs, the less volume of production, which the capitalist is ready to produce at the same price. And for a definite threshold of the sum of costs, production ceases altogether.
Can say that if costs affect both demand and supply, they are at the heart of the pricing.Thus, the utility and costs are two blades of scissors. Utility (need) forms demand, costs form a proposal. A “carnation” connecting demand and the proposal will show the value of the equilibrium price. The decision of Marshall is very simple, but at the same time brilliant. But for a start remember what “demand” is.
In general, “demand” is a demand curve. She is shows the consumer interest in this product, depending on its market price.This is a quantity that indicates the volume that the consumer is willing to buy when different price levels (other things being equal). This is a demand curve.
Each consumer himself determines his demand curve for each type of product. Her the value depends: on the budget of the consumer and the need for this product. As to each volume of the goods the certain price which suits the average consumer, the so-called demand price, then we can say that The same quantity of goods must meet a certain price that suits producer, that is, the price of the offer. However, in the second case, it is logical to say, that the relationship between the volume and the price of the offer is direct.
The intersection point of the two curves will represent the situation when the most ideal price, or close to the ideal, according to which all subjects of economic relations are ready to interact. This is the point of market equilibrium, which is a determining factor in the study of market conditions. With such a mutual arrangement of the demand and supply curves shows readiness of consumers to purchase this product or service, and the producer is ready to give to the market.
Speaking about the fact that the equilibrium between supply and demand is achieved only in one The point at which the demand curve intersects the supply curve, we can also to draw a conclusion not only about the equilibrium price, but also that: at a price that is below the equilibrium level, it is beneficial to increase volume of purchases, that is, the volume of demand will increase, but sellers will incur losses from
increase in sales, as the average total costs will be higher than the price level at a price above the equilibrium index sellers sell more volumes
goods, but at the same time the purchasing power will decrease and as a result sellers will have to reduce the price, in order to profit without loss.
The market value of a commodity is determined by the equality between the marginal utility and marginal cost. (MU = MC) to be observed. Both quantities mutually regulate each other. A point of equilibrium is the same solution the eternal problem associated with the ationalization of the manufacturer’s activities 51 manufacture and sale of products, services and setting prices for them. And at the same time helps the buyer competently to manage the budget what to maximize the usefulness of buying with minimal costs for it.
Thus, Alfred Marshall’s contribution to the development of the economy as a science is great. is he substantiated, consolidated the basic doctrines of demand and supply, and created its own unique the theory of the development of economic relations. And its development will forever remain in the Annals of the history of the development of economic theory.
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