D. If you have the time, you may want to read more of the book than I am assigning.
B. Economics is relevant to mankind both
C. One important question is whether it is necessary to have lower classes, that is:
D. Economics is a late development and still inadequate, because
E. Sometimes it is said that modern industrial life is more competitive than life in the past; what does that mean?
F. Why "competition" is often a pejorative term.
Chapter II: The Substance of Economics
3. but the motive is supplied by an amount of money, and ...
B. Quantifying incentive
4. So if someone is just balanced between two alternaties it makes sense to say that he expects from them equal pleasures.
7. Note the argument he is answering: That no two pleasures are really equal in all their characteristics, so economists cannot compare them.
C. Problems in quantifying motive by money measures.
2. We need not assume that all actions are deliberate and calculated.
D. Money or income or purchasing power or ... is the center that economic science clusters around, not because it is the main aim of human effort but because it is the one convenient way of measuring human motive on a large scale.
E. Considering individual or society.
III. Chapter III: Economic Generalizations or Laws
B. Successful physical sciences are not all exact sciences, but they aim at exactness--i.e. generating predictions that can be tested by experiment.
5. What obeys human laws is called "legal;" what obeys scientific laws is called "normal."
6. The term should not be limited to free competition, since
7. Nor does normal mean "morally right."
C. Implication for price:
D. Invention of the demand curve. (?)
E. Digression on defining commodities:
5. Marshall notes again the question of defining the commodity:
6. Necessaries--wheat, assuming it is the cheapest food--may have quite inelastic demand throughout the price range.
D. Problem in actually observing demand curves.
E. Additional statistical problems
C. The same argument implies that marginal utility per shilling will be the same for all goods consumed.
D. Allocation is not only among present uses of income but also between present and future.
E. Analysis of time discounting
6. We can observe how someone discounts future money amounts but not how he discounts future pleasures, since the same amount of money might produce different amounts of pleasures at different times, circumstances, etc.
8. His discount rate on money will be the market interest rate--because of the equimarginal principle applied through time.
B. Consumer surplus seems a difficult and artificial concept, but ...
4. And they are easily confused in economic analysis:
5. Making one important issue the question of when the two are actually equal.
B. Production cost will depend on quantity being produced, and might increase or decrease with quantity.
C. And note that a firm will choose that set of inputs that minimizes the expenses of producing what they produce, so as to maximize their profits.
E. Equilibrium price:
F. Is price determined by supply or demand?
Chapter VIII: Marginal Cost in relation to values
3. He also has the option of increasing one input, holding others constant (or changing them to allow for the new one)
B. Note that the principle of diminishing return has at least two related but distinct meanings/contexts
C. Confusion with regard to the implications of the equimarginal principle in production: Marginal revenue product=input price.
2. But rather that you look at what is happening on the margin in order to understand what is determining price--namely supply and demand equilibrium, i.e. solving a set of equations, one of which is P=MRP.
D. Machinery vs land--determinants of price
4. Suppose the tax was only a local one:
5. Suppose it were on printing presses
B. Suppose a fixed supply of meteoric stones harder than diamonds falls:
2. Their price:
3. Next suppose some are scattered, can be found with searching
4. Finally, make them brittle, assume an inexhaustible supply to be found at constant search price, and ...
C. Actual goods do not represent pure forms of "land," "capital," "labor," ...
D. Scarcity rents and Differential rents
2. Marshall goes through the logic of thinking of the problems both ways for his meteoric stones.
Chapter XII: Increasing Return
B. Imagine a sudden fashion for wrist barometers.
C. Note the assymetry between demand and supply
D. Note also the difference between what happens to a firm and to an industry.
4. Note also that "supplementary costs" (roughly speaking, our "fixed costs") are likely to be large relative to "prime cost" (roughly speaking, our variable cost) for industries with increasing return, since they are industries with lots of fixed capital etc.
Chapter XIII: Relation to the doctrine of maximum satisfaction
B. The analysis must distinguish among goods with constant, rising, and falling supply curves.
2. Consider the efficiency of the market outcome, with each kind of supply curve, by imagining the effect of a tax or subsidy on such an industry
3. For an industry with a horizontal supply curve, the effect of a tax or subsidy is a net loss, for the standard excess burden reasons--consumer surplus with a tax falls by more than the amount collected, consumer surplus with a subsidy rises by less than the amount spent.
4. With a rising cost curve, a subsidy is even worse, but a tax lowers cost, so it is logically possible for consumer surplus to fall by less than the amount collected.
5. With a falling cost curve, a tax is worse than in the constant cost case, but a subsidy might produce a net benefit, by pushing quantity up and thus cost down.
C. The argument for maximum satisfaction is in part right, in part wrong:
3. And in the case of increasing return (falling supply curves), it is possible that a suitable combination of taxes and subsidies would produce a net gain for all concerned.
6. So we might want to tax commodities with declining return, subsidize ones with increasing return...
Chapter XV: Summary
B. In a perfectly stable equilibrium, long run and short run costs are the same, and equal to price.
C. Marshall discussed (in chapters we did not read) the joint consumption, joint production problem--Smith's wool and mutton, for example, or cars and gasoline.
E. Relation between production cost of productive facilities and value of what they produce--Ricardian rent generalized
E. Analysis of increasing return
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