The theory of consumer behavior (12)

The marginal utility revolution in Europe has led to further blooming of the idea of utility.

Three economists:

ü Menger;

ü Jevon;

ü and Walras

 have developed the theory of marginal utility of value as a replacement of labour theory.

According to Blaug (1985:299):

Marginal utility theory has presented the prime example of the general problem of allocating given resources with maximum effect.

For example, law of diminishing marginal utility created by Jevons that:

“Looking at two individuals engaging in exchange where it cannot take place unless the relative marginal significance of the commodity received exceeds that of the commodity given up for each party in the exchange”

to be continued...

Source: Islamic Science University of Malaysia