21-th topic. Austrian school - marginalism

The main content of representatives of Austrian school and their follower’s research includes:

§  Individual’s psychology has presented in the base of public relations;

§  Economic decisions, behaviors of subjects to provide needs under the condition of limited resources have studied as a main research object.

Austrian school considers that:

§  Stimulating motives and priorities of consumer’s behavior should be studied to understand the nature of behaviors;

§  For that, it is important to estimate the value of water, bread, clothes, moral assests from the consumers’s point of view;

§  By this way, it is possible to define the consumer’s behavior in the market.

There is a theory of “marginal utility” in the base of Austrian school. By this theory, the utility depends on two factors:

1.    Intensity of demand (needs)

The eutility is higher, when the need is higher.

2.    Rarity of the product

The eutility is higher, when the rarity of product is higher.

The utility issues are true from the nature of current economic behaviors’ point of view. However, this concept from the aspects of perfect economic behaviors loses its essence. Because, the utility of that product should not be defined by the rarity of the product.

Thus, for the individual with the perfect economic behavior the exchange value of of even rear product may be close to zero. Perhaps, that product is in the last position of his need’s list.

 

Some materials were used from the book of “The history of economic studies” published under  editing by M.Meybullayev

Aghanemat Aghayev