# Famous Figures and Diagrams in Economics

## Edited by Mark Blaug and Peter Lloyd

### Monograph Book

- Published in print:
- 29 Oct 2010

- ISBN:
- 9781848441606

- eISBN:
- 9781849806466

- Pages:
- 488

- Famous Figures and Diagrams in Economics
- Copyright
- Contents
- Figures
- Contributors
- Acknowledgements
- Introduction
- Basic Tools of Demand and Supply Curve Analysis
- Chapter 1: Marshallian Cross Diagrams
- Chapter 2: The Stability of Equilibrium
- Chapter 3: Indifference Curves and Isoquants
- Chapter 4: The Elasticity of Substitution
- Chapter 5: Substitution and Income Effects
- Chapter 6: Engel Curves
- Chapter 7: Homothetic Production and Utility Functions
- Chapter 8: Long-run and Short-run Cost Curves
- Chapter 9: The Product Exhaustion Theorem
- Chapter 10: Classification of Technical Change
- Chapter 11: Nash Equilibrium
- Welfare Economics
- Chapter 12: Consumer Surplus
- Chapter 13: The Harberger Triangle
- Chapter 14: Community Indifference Curves and the Scitovsky ‘Paradox’
- Chapter 15: The Taxation of External Costs
- Chapter 16: Monopoly and Price Discrimination
- Chapter 17: Duopoly Reaction Curves
- Chapter 18: Monopolistic Competition
- Chapter 19: Kinked Demand Curves
- Special Markets and Topics
- Chapter 20: Backward-bending Labour Supply Curves
- Chapter 21: Location Theory: The Contributions of von Thünen and Lösch
- Chapter 22: Hotelling’s Model of Spatial Competition
- Chapter 23: Cobweb Diagrams
- Chapter 24: Reswitching and Reversing in Capital Theory
- Chapter 25: The Markowitz Mean-variance Diagram
- Chapter 26: Rent-seeking Diagrams
- Chapter 27: The Logistic Growth Curve
- Chapter 28: Graph Theory and Networks
- Basic Tools of General Equilibrium Analysis
- Chapter 29: Circular Flow Diagrams
- Chapter 30: The Unit Simplex
- Chapter 31: The Edgeworth Box
- Chapter 32: The Role of Numbers in Competition
- Chapter 33: Production Possibility Frontiers
- Chapter 34: The Utility-Possibility Frontier
- Chapter 35: The Factor Price Frontier
- Chapter 36: Pareto Efficiency
- Chapter 37: The Phase Diagram Technique for Analyzing the Stability of Multiple-market Equilibrium
- Chapter 38: The Theory of Second Best and Third Best
- Open Economies
- Chapter 39: The Offer Curve
- Chapter 40: The Stolper-Samuelson Box
- Chapter 41: The Lerner Diagram
- Chapter 42: The Trade Theory Diagram
- Chapter 43: The Four-quadrant Diagram for the Two-sector Heckscher-Ohlin Model
- Chapter 44: The Integrated World Equilibrium Diagram
- Chapter 45: The Optimal Tariff
- Macroeconomic Analysis and Stabilisation
- Chapter 46: Keynesian Income Determination Diagrams
- Chapter 47: The IS-LM Diagram
- Chapter 48: The Fleming-Mundell Diagram
- Chapter 49: The Aggregate Demand Aggregate Supply Diagram
- Chapter 50: The Phillips Curve
- Chapter 51: The UV or Beveridge Curve
- Chapter 52: The Demand Curve for Money
- Chapter 53: Non-neutrality of Money
- Chapter 54: The Laffer Curve
- Growth, Income Distribution and Other Topics
- Chapter 55: Intertemporal Utility Maximization – the Fisher Diagram
- Chapter 56: The Diagrams of the Solow-Swan Growth Model
- Chapter 57: The Lorenz Curve
- Chapter 58: Kuznets Curves
- Index

# Chapter 1: Marshallian Cross Diagrams

#### Thomas M. Humphrey

### Monograph Chapter

- Published in print:
- 29 Oct 2010

- Category:
- Monograph Chapter

- Pages:
- (9 total)

## Extract

Thomas M. Humphrey The most frequently used geometric tool of microeconomic analysis is the familiar partial equilibrium demand-and-supply curve diagram of the textbooks. Generations of students and their teachers have employed its intersecting curves (1) to depict the equilibrium or market clearing price and quantity of any particular good or factor input, and (2) to explain how (Walrasian) price or (Marshallian) quantity adjustments ensure this equilibrium, the first by eliminating excess supply and demand, the second by eradicating gaps between supply price and demand price. The diagram achieves much with little. It illustrates how parametric shifts in its two curves caused by changes in tastes, incomes, technology, factor prices and prices of related goods operate to alter a good’s equilibrium price and quantity. It shows how the shifting and incidence of a perunit tax or tariff on buyers and sellers depends upon elasticities of demand and supply. It depicts how price ceilings and price floors generate shortages and surpluses respectively. With it one can compare the allocative effects of competitive versus monopoly pricing and indicate the welfare costs of market imperfections. For all its simplicity, it is a powerful and flexible tool. Economists typically associate the diagram with Alfred Marshall, the English neoclassical economist who was its most influential nineteenth century expositor. So strong is this association that the diagram has been christened the Marshallian cross, or Marshallian scissors after Marshall’s analogy comparing the price-determining properties of a brace of demand and supply curves with the cutting properties of the...

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- Famous Figures and Diagrams in Economics
- Copyright
- Contents
- Figures
- Contributors
- Acknowledgements
- Introduction
- Basic Tools of Demand and Supply Curve Analysis
- Chapter 1: Marshallian Cross Diagrams
- Chapter 2: The Stability of Equilibrium
- Chapter 3: Indifference Curves and Isoquants
- Chapter 4: The Elasticity of Substitution
- Chapter 5: Substitution and Income Effects
- Chapter 6: Engel Curves
- Chapter 7: Homothetic Production and Utility Functions
- Chapter 8: Long-run and Short-run Cost Curves
- Chapter 9: The Product Exhaustion Theorem
- Chapter 10: Classification of Technical Change
- Chapter 11: Nash Equilibrium
- Welfare Economics
- Chapter 12: Consumer Surplus
- Chapter 13: The Harberger Triangle
- Chapter 14: Community Indifference Curves and the Scitovsky ‘Paradox’
- Chapter 15: The Taxation of External Costs
- Chapter 16: Monopoly and Price Discrimination
- Chapter 17: Duopoly Reaction Curves
- Chapter 18: Monopolistic Competition
- Chapter 19: Kinked Demand Curves
- Special Markets and Topics
- Chapter 20: Backward-bending Labour Supply Curves
- Chapter 21: Location Theory: The Contributions of von Thünen and Lösch
- Chapter 22: Hotelling’s Model of Spatial Competition
- Chapter 23: Cobweb Diagrams
- Chapter 24: Reswitching and Reversing in Capital Theory
- Chapter 25: The Markowitz Mean-variance Diagram
- Chapter 26: Rent-seeking Diagrams
- Chapter 27: The Logistic Growth Curve
- Chapter 28: Graph Theory and Networks
- Basic Tools of General Equilibrium Analysis
- Chapter 29: Circular Flow Diagrams
- Chapter 30: The Unit Simplex
- Chapter 31: The Edgeworth Box
- Chapter 32: The Role of Numbers in Competition
- Chapter 33: Production Possibility Frontiers
- Chapter 34: The Utility-Possibility Frontier
- Chapter 35: The Factor Price Frontier
- Chapter 36: Pareto Efficiency
- Chapter 37: The Phase Diagram Technique for Analyzing the Stability of Multiple-market Equilibrium
- Chapter 38: The Theory of Second Best and Third Best
- Open Economies
- Chapter 39: The Offer Curve
- Chapter 40: The Stolper-Samuelson Box
- Chapter 41: The Lerner Diagram
- Chapter 42: The Trade Theory Diagram
- Chapter 43: The Four-quadrant Diagram for the Two-sector Heckscher-Ohlin Model
- Chapter 44: The Integrated World Equilibrium Diagram
- Chapter 45: The Optimal Tariff
- Macroeconomic Analysis and Stabilisation
- Chapter 46: Keynesian Income Determination Diagrams
- Chapter 47: The IS-LM Diagram
- Chapter 48: The Fleming-Mundell Diagram
- Chapter 49: The Aggregate Demand Aggregate Supply Diagram
- Chapter 50: The Phillips Curve
- Chapter 51: The UV or Beveridge Curve
- Chapter 52: The Demand Curve for Money
- Chapter 53: Non-neutrality of Money
- Chapter 54: The Laffer Curve
- Growth, Income Distribution and Other Topics
- Chapter 55: Intertemporal Utility Maximization – the Fisher Diagram
- Chapter 56: The Diagrams of the Solow-Swan Growth Model
- Chapter 57: The Lorenz Curve
- Chapter 58: Kuznets Curves
- Index