In this article we will discuss about the introspective cardinalist theory of consumer behaviour as developed by Sir Alfred Marshall. 1. The Law of Diminishing Marginal Utility: In Marshall's theory, utility is cardinally measurable in terms of money. According to the Marshallian law of diminishing marginal utility (LDMU), as the consumer goes on consuming a certain good, the marginal utility [...]
In this article we will discuss about the cardinal and ordinal measurability of utility. Cardinal Measurability of Utility: Some economists are of the opinion that utility can be measured in cardinal units. For example, Sir Alfred Marshall (1842-1924), the noted neoclassical economist, said that utility can be measured cardinally in terms of money. Money is the measuring rod of utility. [...]
In this article we will discuss about the conditions for consumer equilibrium. 1. Consumer Equilibrium – Single Commodity Case: Now see how the consumer buying a single good in the market, would behave. Let’s assume: (i) The purchase would be confined to only one commodity. (ii) The price of the commodity is given in the market. The consumer only determines [...]