RECENT DEVELOPMENTS IN DEMAND THEORY
The demand theory is primarily concerned with the elucidation the law demand. The law or demand states that the demand curve lopes downward which implies two things: (a) a fall in the price or a jocundity cilium tn increase the quantity demanded, and (b) all increase in supply tends to price into quantity” and ‘quantity into price’ arc the two the law of demand, The law holds good other things hang equal.We can notice the following different stages of development in the the of demand:
(i) The Marshall marginal Utility Theory.
(ii) slickness-Allen Indifference Curve Technique.
(iii) Samuel’ on’s Revealed Preference colliery.
(iv) Dickensian Revised Theory of Demand,
(I’) Humane- fornicator Statistical Utility Theory.
(I.;) Armstrong’s marginal Preference Theory.
We have already tidied in some detail the first three, the Marshall utility analysis. Hicks’ indifference curve technique and Samuelson’s Revealed Preference Theory. The Marshall utility analysis, we have seen, is based on the two unaccountable assumptions, that utility is cardinally measurable and tattletale marginal utility of money remains constant. The indifference curve technique steers clear of these doubtful assumptions and arrives at the . mac conclusions us the Marshall utility analysis but with fewer and less restrictive a . assumptions. These two theories apply the introspective method in Economic . introspective method lays do w n general propositions which are not observable by nuthatch elves but which have obscure able.consequences. Samuelson’s theory of revealed preference is bused on actually observed consumer’s behavior.
We shall now briefly notice the other development in the demand theory particularly Hicks’ revised theory of ordinal utility. the cardinal utility theory of Westernmost and Yon Humane, both called behaviorists who insist on observable or refutable data and the Marginal Preference Theory if W. E. Armstrong-representing a revival of the introspective cardinal ism.