3. The interest rate is determined by the supply of capital. No discussion of supply curve for capital--savngs as a function of the interest rate.
B. Ricardo: Price tends towards the sum of factor costs, but ...
2. Interest is determined by wages, which are driven by the price of corn.
3. His definition of value gives him a tool for looking at relative prices and for implicitly finding the general equilibrium.
C. Marshall: Most of a modern theory.
3. The answer to the "supply or demand (usefulness or cost of production) determines price question" is: "Both, simultaneously."
4. Marshall does not have the sort of fully worked out axiomatic theory of economics that you have encountered, or will in a graduate price theory course, but he has a lot of the ideas that go into it. And he has a richer and more realistic picture of the economy than the one used to generate such a theory--we, in that respect, are more like Ricardo than he is.
5 And he has a detailed discussion of the advantages and disadvantages of various taxes, the economic part of which is undercut by the lack of a good price theory.
B. Ricardo is in favor of laissez-faire in general, and in particular in trade
C. Marshall is a much more qualified supporter of laissez-faire
3. Another is that he has consumer surplus etc., which ...
4. On the other hand, Marshall anticipates at least some of the modern public choice critique of interventionism.
V. Methodology: The authors provide an interesting ranges of approaches to doing economics.
2. Is productivity on marginal land falling?
3. Or in other words, all contrary evidence can be explained away.
C. Marshall: Methodologically self-conscious, because the 19th century contained lots of critics of economics.
VI. What you should have learned:
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