ABSTRACT
This chapter presents a description of the essential theoretical elements of the marginalist or neoclassical framework. The ensuing prices will act as their optimal allocators: they adapt the wishes of individuals to a given amount of initial endowments. Each price will thus reflect the relative scarcity of each good. An equi-proportional change of all prices simultaneously modifies both the prices of the goods that are bought and those that are sold, leaving the consumer’s purchasing power unchanged. Prices, which are considered as given by consumers, are determined ‘by the market’, that is, by the interplay of supply and demand. Scarcity is the universal feature of economic life. People want more of virtually everything than could be supplied at a price of zero. Equilibrium prices curtail these excessive claims by rationing scarce supplies to the users who place the highest value on them.
