Mathematical Economics - Marginal analysis in the consumer behavior theory

Jorge Marques and Rui Pascoal

MPRA Paper from University Library of Munich, Germany

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.

Keywords: Marginal analysis; consumer behavior models; diminishing marginal rate of substitution; weak axiom of revealed preference (search for similar items in EconPapers)
JEL-codes: C02 D03 (search for similar items in EconPapers)
Date: 2018
New Economics Papers: this item is included in nep-hpe, nep-ore and nep-upt
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:96442

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