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Criticism of Alfred Marshall's Definition of Economics
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Criticism of Alfred Marshall's Definition of Economics

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Questions and Answers

What is the main focus of economics according to the scarcity definition by Lionel Robbins?

  • The promotion of human welfare
  • The relationship between economics and human behavior
  • Limited resources and their alternative uses (correct)
  • Unlimited wants and resources

    • Which economist critiqued Marshall's welfare definition of economics?

  • Adam Smith
  • Lionel Robbins (correct)
  • John Maynard Keynes
  • David Ricardo

    • What is the criticism of the scarcity definition regarding its universality?

  • It only applies to certain countries
  • It is a universal science
  • It is not a universal science (correct)
  • It only applies to certain goods

    • What is the main problem addressed by the scarcity definition of economics?

    <p>The problem of limited resources</p> Signup and view all the answers

    According to Robbins, what is the role of economics?

    <p>To analyze human behavior</p> Signup and view all the answers

    What is a criticism of Marshall's welfare definition of economics?

    <p>It neglects some material goods</p> Signup and view all the answers

    What role does capital play in providing raw materials for production?

    <p>It provides raw materials on a continuous basis</p> Signup and view all the answers

    How does capital impact the productivity of laborers?

    <p>It improves per capita productivity, thus increasing overall production</p> Signup and view all the answers

    What is the role of capital in providing employment opportunities?

    <p>It generates more employment opportunities through additional machinery, but modern production labour replacing machines may reduce employment</p> Signup and view all the answers

    How does capital help in the transportation of goods?

    <p>It provides transport facilities in the form of roadways, railways, ships etc.</p> Signup and view all the answers

    What is the role of capital in purchasing machinery, tools, and raw materials?

    <p>Capital serves as a means of payment for these items</p> Signup and view all the answers

    How does capital assist laborers in being more efficient?

    <p>Capital supplies better tools and machines to laborers</p> Signup and view all the answers

    What is the definition of relatively inelastic demand?

    <p>Total expenditure decreases with the falling of the price and increases with the raising of the price</p> Signup and view all the answers

    How is elasticity of demand calculated in the Point Method?

    <p>With the formula Ep = Lower Segment / Upper Segment</p> Signup and view all the answers

    What is the main purpose of the Arc Method?

    <p>To measure elasticity of demand for large changes in price and demand</p> Signup and view all the answers

    What is the elasticity of demand at point 'P' as shown in the diagram?

    <p>1</p> Signup and view all the answers

    What is the elasticity of demand at point 'P1' as shown in the diagram?

    <p>3</p> Signup and view all the answers

    What is the elasticity of demand at point 'P2' as shown in the diagram?

    <p>0.33</p> Signup and view all the answers

    What is the relationship between total utility and marginal utility when the law of diminishing marginal utility operates?

    <p>Total utility increases and marginal utility diminishes</p> Signup and view all the answers

    What happens to the marginal utility when the total utility reaches its maximum?

    <p>It becomes zero</p> Signup and view all the answers

    Which of the following is an assumption of the law of diminishing marginal utility?

    <p>The units must be of reasonable size</p> Signup and view all the answers

    What is the shape of the total utility curve when the total utility is increasing?

    <p>Upward sloping</p> Signup and view all the answers

    What happens to the total utility curve when the total utility is diminishing?

    <p>It moves downward</p> Signup and view all the answers

    Which of the following is an exception to the law of diminishing marginal utility?

    <p>Collection of rare goods</p> Signup and view all the answers

    What is the relationship between price and supply according to the law of supply?

    <p>Direct proportion</p> Signup and view all the answers

    What is the shape of the supply curve for rare goods?

    <p>Parallel to OY-axis</p> Signup and view all the answers

    What happens to the supply of labour when wages are increased beyond a certain stage?

    <p>It decreases after an initial increase</p> Signup and view all the answers

    What is the term for the change in supply due to a change in the determinants of supply?

    <p>Shift in supply</p> Signup and view all the answers

    What is the shape of the supply curve for land or agriculture goods?

    <p>Parallel to OY-axis</p> Signup and view all the answers

    What is the term for the total supply obtained by adding the supply of all sellers in the market?

    <p>Market supply</p> Signup and view all the answers

    Study Notes

    Marshall's Definition of Economics

    • Marshall enhanced the status of man from economic man to social man.
    • According to Marshall, economics is related to material goods that promote human welfare.

    Criticism of Marshall's Definition

    • Lionel Robbins criticized Marshall's definition on the following grounds:
      • Welfare definition is incomplete.
      • Economics must be neutral between ends.
      • Marshall neglected some material goods that do not promote human welfare but are still produced, exchanged, and consumed.

    Robbins' Definition of Economics (Scarcity Definition)

    • Robbins defined economics as "a science which studies human behavior as a relationship between ends and scarce means which have alternative uses".
    • Main points of Robbins' definition:
      • Wants are unlimited.
      • Limited resources.
      • Alternative uses of limited resources.
      • Problem of choice.

    Merits of Robbins' Definition

    • Economics is an analytical science.
    • Economics becomes a universal science.
    • Economics is a positive science.
    • Neutral between ends.

    Criticism of Robbins' Definition

    • Economics is not a universal science.
    • Money is a form of capital when used to purchase machinery, tools, and raw materials.

    Functions of Capital

    • Capital supplies tools and machines that assist laborers in working efficiently.
    • Capital improves per capita productivity of laborers.
    • Capital supplies raw materials required for production.
    • Capital generates more employment opportunities.
    • Capital provides transport facilities.

    Elasticity of Demand

    • If the total expenditure decreases with a fall in price and increases with a rise in price, it is said to be relatively inelastic demand (EP < 1).
    • Point Method: Ep = Lower Segment / Upper Segment.
    • Arc Method: MUx = ∆TU / ∆P.

    Measurement of Elasticity of Demand

    • Table explanation of total utility and marginal utility.
    • Diagrammatic explanation of total utility and marginal utility curves.

    Main Points of Total Utility and Marginal Utility

    • When total utility increases, marginal utility diminishes.
    • When total utility reaches the maximum, marginal utility is zero.
    • When total utility decreases, marginal utility becomes negative.

    Assumptions of Law of Diminishing Marginal Utility

    • Units are homogeneous.
    • Units are of reasonable size.
    • There is a one-time gap between one unit of consumption and the next unit.
    • There is no change in the taste and preferences of the consumer.

    Exceptions to Diminishing Marginal Utility

    • Collection of rare goods.
    • Hobbies.

    Supply of Goods

    • Supply curve: shows the relationship between price and quantity supplied.
    • Market Supply schedule: shows the various quantities of goods supplied by various producers at various levels of prices.
    • Exceptions to the Law of Supply: Land (or) Agriculture goods, Rare goods, Supply of labor.

    Change in Supply

    • Extension and contraction of the supply.
    • Changes in supply due to changes in determinants of supply.

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    Description

    Explore the criticism raised by Lionel Robbins against Alfred Marshall's definition of economics which focused on promoting human welfare but was considered incomplete and non-neutral between ends.

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