Critiques of Alfred Marshalls theories( neoclassical theory and

Critiques of Alfred Marshall's theories( neoclassical theory and Critiques of Alfred Marshall's theories( neoclassical theory and supply and demand theory); how can we use his theories in business â€" Coursework Example > Critique Of Alfred Marshall’s Theory Critique Of Alfred Marshall’s Theory Critique Of Theories Various theories provided by Alfred Marshall have been criticized by different researchers. The theory of demand and supply that states that as the price of a particular good or service increases have been heavily criticized by Sraffa who states that in order for the theory of demand and supply to stand its ground it is necessary for both demand and supply operate in an independent manner and cannot depend on each other. Another reason Sraffa provided for criticizing the model is that in order for a supplier to restrict his/her production of goods it is much necessary for the resources to be available in restricted amounts (Keen, 2010). In other words, Sraffa stated that price cannot restrict supply; instead it is the availability of raw material that restricts supply. The theory of marginal utility provided by Marshall has even been severely criticized. One of the criticisms regardi ng the theory of diminishing marginal utility is that utility or the benefits that an individual derives from the consumption of a particular good or service cannot be measured (Rima, 2012). Marshall states that utility and diminishing marginal utility can be measured and its increase and decrease can even be measured. But criticizers state that the utility is psychological in nature and is dependent on the mental state of an individual and cannot be measured. Furthermore the theory is criticized because it cannot be universally applied (Sivagnanam, 2010). This is because consumption of certain goods and services may never satisfy a consumer and he may continue to demand more. For example: a person who is alcoholic cannot stop drinking as with every drink he wants more alcohol. The theory of neo-classical economics that was developed by Marshall has even experienced criticism. Marshall believed that human beings are rational beings and they make purchasing and consumption decision s based on costs and benefits. This aspect of the theory has been criticized on the grounds that that various activities conducted by an individual cannot be categorized as rational and human beings do not always take in to consideration the benefits and disadvantage of a purchasing decision while making a purchase (Amann, 2011). This is true because various purchasing and consumption decisions of an individual are made without identifying the advantages and disadvantages associated with them. Business Application Of Marshall’s Theory The law of demand that was identified by Marshall can be applied for various purposes in real life business scenarios. One way of applying the concept of law of demand to a particular business would be while a business determines the prices of goods and services it is offering. The law state that demand rises as price falls and demand falls as price rises. This concept can be applied to business in order to attract more customers. If a particular business is not being able to sell enough goods and services then it needs to compare the prices of the goods that the business has set with the prices of the goods at which a competitor is selling. If the prices of the goods of the competitor are lower than the business’s prices then that would suggest that the business needs to decrease its prices in order to sell more goods and services. The concept of diminishing marginal utility can be used by a business in order to identify why the demand for its particular goods and services are declining. If a particular business is experiencing decline in the number of goods it is selling in the market. The business may need to conduct market research and identify the reason. For example: certain goods such as warm clothes have higher demand during winter season. This means that the demand for such clothes during summer season will be low since during that period of the year the utility obtained from consuming warm clothes decline for the customers. Therefore, the supplier of warm clothes can identify why the demand of warm clothes decrease during summer season. Conclusion Alfred Marshall provided the world of economics with various theories including demand and supply theory, diminishing marginal utility and he even contributed heavily to the position of new-classical economics. Bibliography Keen, S. (2010). Debunking economics: the naked emperor of the social sciences. London [u. a.], Zed Books. Rima, I. H. (2012). Development of Economic Analysis. Hoboken, Taylor and Francis. http: //www. 123library. org/book_details/? id=86596. Sivagnanam, K. J., Srinivasan, R. (2010). Business economics. New Delhi, Tata McGraw Hill. Amann, W., Spitzeck, H. (2011). Business schools under fire: humanistic management education as the way forward. Basingstoke, Palgrave Macmillan.