Alfred Marshall

(1842—1924) economist

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British economist, regarded as one of the founders of the neoclassical school in economics.

Marshall was born in London and graduated in mathematics from St John's College, Cambridge. He began lecturing in moral science at Cambridge in 1868. In 1882 he took the chair of political economy at Bristol and was the first principal of University College, Bristol. In 1885 he became professor at Cambridge University, retiring in 1908.

Marshall's influence on microeconomics was profound, both in teaching and policy-making. He developed downward-sloping demand curves from marginal utility theory and upward-sloping supply curves (higher prices leading to greater output), at the intersection of which equilibrium prices are determined. He coined the term ‘elasticity’ to denote responsiveness of demand or supply to small changes in price, and introduced the concepts of consumer surplus, quasi-rent, and external economies. Marshall described the time periods over which consumption and production decisions can change: (1) very short run, when supply is fixed and prices are determined by market forces; (2) the short period, when supply can be increased up to the maximum capacity of the existing capital stock; (3) the long period, when supply can be varied given the existing state of technology, and firms enter or leave the industry; and (4) the very long period, when technology also changes.

Although his main contribution was his work on the theory of value and the theory of the firm, Marshall also wrote on The Pure Theory of Foreign Trade (1879), Industry and Trade (1919), and Money, Credit and Commerce (1923).

Subjects: Economics.

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