Century School Of Economic The Marginalist School (Essay Sample)
Please answer each question with equal amount of words between the twosource..
The Marginalist School
Marginalist is a mid-nineteenth century school of economic thought credited to among others, British Philosophers, Karl Max. In the mid-nineteenth century, it began to dominate economics and to large extent still reigns. This school of thought posits that it is necessary in economics to view the market in a different angle with a different lens. The angle and lens is, fully exploring the process of rational decision making process on both sides of the market, that is, the demand side and supply side. The marginalist school argued that economic decisions were typically made at the margin. They also criticize and discredit the classical school and its place in the realm of economics. This research will discuss in depth the key innovations of the marginalist school compared to the classical school, its criticisms of the classical school and lastly, the ideas Marx borrowed from the classical school.
There is no doubt that the marginalist work dominated economics particularly on analyses of demand and supply, the theory of value and other topics related to decision making by market participants. Key innovations which are to a large extent hinged on these topics are among the reasons for the dominance.Key Innovations of the Marginalist School Compared to the Classical School
The major innovation is “the view of economic growth.” They discussed economic growth in light of the market and the aspects of demand and supply. With respect to the aspect of demand, was the concept of utility and how its changes affect the price the consumers are willing to pay for the good and services. In market, the commodities are demanded or required by the consumer for various reasons. One of the reasons is the usefulness or the satisfaction a consumer derives from the consumption of the commodity. It is this satisfaction or usefulness that is referred to as “utility.”
This innovation is pegged on the behavior of consumers and how the satisfaction derived from the consumption of that commodity influences his choice of buying more or additional unit of the same item thereby contributing to economic growth. From the concept of utility came the economic law of “diminishing marginal utility.” This law states that marginal utility falls as consumer buys additional unit of the same item in a given period of time (Study Moose, n.p). As regards the supply side, the marginalist built on the classical school to fully examine the value of resource used in production. Marginalists school provide insight on how the economy should be analyzed in the context of demand and supply side of the market. It is no doubt that market behaviour can sometime as confusing as it is fluctuating. Economic growth can therefore be accurately from studying the behaviour of the market based on demand and supply.
Still on the view of economic growth, they created an economic theory of the relations between change in technology and economic growth. They contributed exogenous innovation relative to the public good features of technological progress dealing with externalities and increasing marginal returns (Study Moose, n.p). Classical school on the other hand fails to provide adequate innovations as far as economic growth is concerned. The analysis of the marginalists makes up much of neoclassical economics and creates the popular economic tenet of “rational decisions are made on the margin” (Kenton, n.p). It is noteworthy that it was the consistent application of the popular economic tenet that marked the clear distinction between classical theory and modern economics.
This school’s view of economic growth compares to the classical school which id...
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