(a) Discuss the main contributios to economic thought of von Thnnen, Cournot, and Gossen,with an emphasis on the similiarities between the ideas they developed.
The concept of marginalism put forward by von Thnnen held that when production occurs under constant returns to scale, marginal-product factor pricing will equal total product. This concept changed the understanding of the earlier concept of an aggregate production surplus. The von Thnnen approach to the issue provided a basis for the development of the concept of marginal utility (Eatwell, Milgate, & Newman, 2002).
Gossen (1854) was one of the first economists to refer to a final utility (or marginal utility). The marginal utility concept allowed economists to integrate theories of value, production, and income. The integration of these theories yielded a better understanding of the distribution characteristics of economic output. Gossen and von Thnnen were interested in the process through which factors of production were transformed into products with utility, as well as how the end products were distributed.
Cournot introduced a quantity-choice model that was based in part on the marginal concept. Cornot's model attempted to explain the behavior of businesses in relation to one another and in relation to the concept of a consumers' surplus. Cournot traced a direct line from the single-seller (monopoly) to the two-seller (duopoly) to the multiple-seller (oligopoly) to the unlimited-seller (perfect competition) markets. Cournot demonstrated that, through this progression, the monopolistic situation wherein marginal costs equal marginal revenue evolves into the perfect competition situation wherein price equals marginal cost.
(b) What are the central features of marginalism?
Marginalism refers generally to the utility of value of products. As an example, the utility value of items that are required to sustain physical life is greater than the utility va...