First Glance;

First published in 1890, and reaching an eighth edition in 1927, Marshall's Principles of Economics was in its time the dominant textbook on economics in Britain. Intended as a compendium or codification of the whole of economic thought, only the first of two planned volumes was published. Marshall's study is microeconomics, the study of individual markets and industries. Although Marshall considered that the concern of economics was human behavior, he introduced the rigorous use of mathematics, methods of science, and differential calculus. He famously stated that economic evolution is gradual. Marshall introduced time into economic analysis as a powerful tool (partial equilibrium analysis); he isolated various forces and time to work out partial solutions, "other things being equal;" in a step-by-step fashion, more factors are introduced to allow treatment of broad issues and the domain of the dynamic problem becomes larger. Of consumer demand, he developed the concepts of marginal increments and marginal utility, elasticity of wants, immediate and deferred uses, price and utility, and consumer surplus. Marshall analyzed the factors of production as land, labor, capital, and organization. Marshall realized neither labor, supply, or demand could account for price and output; price determination was an equilibrium of normal supply and demand, and he develops the use of demand and supply curves and the concepts of price elasticity of demand, marginal costs, and diminishing and increasing returns. He recognized the link between shifts in supply and demand. He showed that consumers attempt to equal prices to their marginal utility. He also recognized consumer surplus and producer surplus. He used the idea of surplus to analyze the effects of taxes and price shifts on markets. Since markets adjust to changes in supply and demand over time, he introduced the ideas of the market period, the short period when output can be increased by adding labor, and the long-term period for capital to be introduced. Other concepts he developed include those of competitive equilibria, internal and external economies of scale, increasing and decreasing cost industries, quasi-rent, and costs of production. Finally, the issues of distribution of national income are explored: earnings of labor, interest, profits of capital and business, rent of land, and the effect of progress on value and standards of living.