Knowra Marginal revolution Marginal revolution The late nineteenth-century shift in economics toward explaining value and prices through marginal utility, scarcity, and individual choice. Its central ideas emerged independently in the 1870s.
Marginal utility : The additional satisfaction or benefit gained from consuming one more unit of a good. It supplied the key explanation for why value depends on the next available unit, not total usefulness.
William Stanley Jevons : A British economist who developed a mathematical theory of value based on utility and exchange. His 1871 book presented one of the revolution's independent formulations.
Alfred Marshall : A British economist whose Principles of Economics systematized marginal analysis and supply-and-demand theory. He reconciled marginal utility with production costs in the dominant textbook tradition.
Classical economics : An economic tradition associated with thinkers such as Adam Smith, David Ricardo, and John Stuart Mill, focused on production, distribution, and growth. Its labor- and cost-centered accounts of value formed the main intellectual backdrop for marginalism.
Neoclassical economics : A broad economic tradition centered on marginal choice, price formation, and equilibrium. It became the main tradition built from the revolution's analytical foundations.
Diminishing marginal utility : The principle that additional units of a good usually yield progressively less utility, other things equal. It helps explain why willingness to pay falls as consumption rises.
Carl Menger : An Austrian economist who founded the Austrian School and developed a theory of value based on individual needs. His 1871 Principles of Economics established a distinct, nonmathematical version of marginal analysis.
Francis Ysidro Edgeworth : An Irish economist who used mathematical methods to analyze utility, exchange, and competition. His work extended marginal analysis through formal models of bargaining and exchange.
Labor theory of value : A family of theories explaining the value of commodities through the labor required to produce them. Marginalists instead made individual evaluations and scarcity central to value.
Economic equilibrium : A state in which economic plans or market forces are mutually compatible under specified conditions. Marginal analysis made equilibrium a central way to represent coordinated choices.
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