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Mathematical Economics - Marginal analysis in the consumer behavior theory

Author

Listed:
  • Marques, Jorge
  • Pascoal, Rui

Abstract

In the neoclassical theory, the economic value of a good is determined by the benefit that an individual consumer attributes to the last ("marginal") unit consumed. Marginal analysis was introduced to the theory of value by William Jevons, Carl Menger and Léon Walras, the founders of marginalism. Since the so-called “marginalist revolution” of the 1870s, differential (or infinitesimal) calculus has been applied to the mathematical modelling of economic theories. Our goal is to present some consumer behavior models, their advantages and limitations, using the methodology of economic science. It should be emphasized that each (re)formulation is based on different economic principles: diminishing marginal utility, diminishing marginal rate of substitution and weak axiom of revealed preference.

Suggested Citation

  • Marques, Jorge & Pascoal, Rui, 2018. "Mathematical Economics - Marginal analysis in the consumer behavior theory," MPRA Paper 96442, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:96442
    as

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    File URL: https://mpra.ub.uni-muenchen.de/96442/1/MPRA_paper_96442.pdf
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    References listed on IDEAS

    as
    1. Mas-Colell, Andreu & Whinston, Michael D. & Green, Jerry R., 1995. "Microeconomic Theory," OUP Catalogue, Oxford University Press, number 9780195102680.
    2. Philip Mirowski, 1991. "The When, the How and the Why of Mathematical Expression in the History of Economic Analysis," Journal of Economic Perspectives, American Economic Association, vol. 5(1), pages 145-157, Winter.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Marginal analysis; consumer behavior models; diminishing marginal rate of substitution; weak axiom of revealed preference;
    All these keywords.

    JEL classification:

    • C02 - Mathematical and Quantitative Methods - - General - - - Mathematical Economics
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles

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