Alfred Marshall, the founder of modern Microeconomics .docx

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Department
Business and Environment
Course
BSEN 401
Professor
William Huddleston
Semester
Fall

Description
Alfred Marshall, the founder of modern Microeconomics in 1890, defined Economics as “the study of mankind in the ordinary business of life; it examines that part of individual and social action which is most closely connected with he attainment and with the use of the material requisites of well-being.” Recent textbooks prefer the following definition: “Economics is the study of how society chooses to allocate its relatively limited resources among the unlimited wants of its members.” Marshall‟s definition is more general and compatible with any approach to Economics. The textbook definition uses the most important terms in microeconomics – scarcity, choice, resource, allocation, and wants – but also contains the assumption that human wants are unlimited. This approach follows from the understanding of an economic good as scarce; i.e., one for which wants (Demand) are greater than the availability quantity (Supply). If quantity is greater than wants such as for oxygen, there is no scarcity and thus no problem of allocation among choices. The statement that wants are unlimited ensures that there will always be economic goods since wants will always expand faster than our technological ability to satisfy them. Economic theory begins with clear definitions and simplifying assumptions and then proceeds by logic to conclusions about economic relationships. This approach appears
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