1. Chapter 14: The Development of Modern Microeconomic Theory
Questions for Review, Discussion, and Research
1, 2, 3, 4, 5, 6

2. Distinguishing Features
Not the elements or topics but the modeling approach
The assumptions and conclusions are less important than the empirical “fit” of a model to databases
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3. Decline of Marshallian Economics
Partial equilibrium analysis was a workable theory that sought to answer ‘real world’ questions
Walked a fine line between
Historical and institutional approach
Formalists who believed that economics should be a science

4. The latter reach apex at prestige in 1959 with the general equilibrium model of Arrow and Debreu

5. Attributes of Neoclassical Approach
Focuses on the efficient allocation of economic resources (inputs) and outputs in product markets
Accepts some variation of utilitarianism
Focuses on marginal tradeoffs

6. 4. Assumes far sighted rationality
5. Accepts methodological individualism
6. Structured around general equilibrium concepts