Jevons William Stanley (1835-1882), British economist and mathematician, born in Liverpool and educated at University
College University of London. He is known for the development of the theory of marginal utility which states that utility determines value. Jevons demonstrated the relationship between utility and value in mathematical terms.Marginal UtilityMarginal Utility in economics, worth to a consumer of the last unit in a series of similar units of a consumer good that the consumer believes is worth acquiring. The concept of marginal utility is part of the law of diminishing utility. According to this law possession of added units of a commodity increases the total psychological satisfaction or utility of the possessor but with each successive unit total utility grows at a slower rate as the ability to enjoy each successive unit becomes less keen. A point is finally reached beyond which no further effort at acquisition will be deemed worth making.This concept is significant because prior to its application in classical economic theory, economists believed that cost of production was the sole or principal determinant of the market value of goods. Such an approach was finally considered inadequate by most economists because it failed to give sufficient weight to such factors as investment or
capital charges difference in value between different kinds of labour and the subjective factors that determine individual demands for a commodity. With the recognition of these subjective factors of which the point of marginal utility is one of the most important economists realized that the value of labour and capital themselves is partly determined by the demand of
individuals for the commodities in whose production those factors of production are applied. In other words although the actual labour and capital cost of a commodity may ensure for the moment that it will not be sold for a price below cost even if no buyers can be found to pay the cost price in the long run such a lack of demand will force a reduction in labour and capital costs in order to lower the price down to the point at which an effective demand will be found.Cost operates only as one of a number of interrelated factors in determining market value and is itself affected by these other factors. Similarly, the subjective attitudes of individuals towards commodities in the market cannot alone determine market values, but must be considered in relation to the actual prices paid for labour and capital and in relation to the points of marginal utility for all the other individuals currently in the market. Each purchaser in other words, makes purchases according to an adjustment between her or his own valuations of commodities and those that prevail in the market and the valuations that prevail in the market are the result of balances of all the valuations of all the individual purchasers in the market at that time.