ABSTRACT

                           The significance and validity of both problems and methods cannot be fully grasped without having knowledge of the previous problems and methods to which they are the (tentative) response. Therefore, it is necessary to have the knowledge of history of any science before taking any current work. This paper investigates how the value and price of any commodity is determined besides, the phases of the development of demand theory. Development of the theory of demand has taken a long way to came into being. This paper finds that Classical theorists did not give consumption a place equal to that held by production and distribution in the schema of science. Jevons changed the emphasis to demand and depended upon utility to explain value. Marginal utility theorists introduced the psychological element and developed the theory of utility as a diminishing, and of sacrifice as an increasing function of the quantity of the commodity. The subjective theory of value was an attempt to use psychological introspection to go behind the observed behaviour of demand, supply and price. It sought to explain every relationship between demand, supply and price in terms of a more fundamental relationship between pleasure, pain and the means of satisfying wants. The theory of demand developed by Marshall was richer since he did not merely linked marginal utility theory with the theory of demand in a very convincing manner but also explained the factors, which lies behind observed choice.

Key words: Schema, Demand, Supply, Marshall, Bernouli