Definition of Neoclassical economics:
One of the key early assumptions of neoclassical economics is that utility to consumers, not the cost of production, is the most important factor in determining the value of a product or service. This approach was developed in the late 19th century based on books by William Stanley Jevons, Carl Menger, and Léon Walras.
Present-day dominant school of economic thought built on the foundation laid by the 18th century (classical) theories of Adam Smith (1723-90) and David Ricardo (1772-1823) refined by the 19th and 20th century theories of Alfred Marshall (1842-1924), Vilfredo Pareto (1848-1923), John Clark (1847-1938), and Irving Fisher (1867-1947). It is classical in the sense that it believes competition leads to an efficient allocation of resources and regulates economic activity that establishes equilibrium between demand and supply through the operation of market forces. It is neo in the sense that it departs sharply from the classical viewpoint in its analytic approach that places great emphasis on mathematical techniques. In opposition to Keynesian economics this school states that savings determine investment (not the other way round), and is concerned primarily with market equilibrium and growth at full employment instead of with the under-employment of resources. Not to be confused with new classical economics.
Neoclassical economics is a broad theory that focuses on supply and demand as the driving forces behind the production, pricing, and consumption of goods and services. It emerged in around 1900 to compete with the earlier theories of classical economics.
How to use Neoclassical economics in a sentence?
- It might be a good idea to study up on neoclassical economics and see if you can find a way to use them to your advantage.
- They call the difference between actual production costs and retail price the economic surplus.
- You should always try and find new ways to improve and the theory of neoclassical economics may help you with that.
- Neoclassical economists argue that the consumer's perception of a product's value is the driving factor in its price.
- We studied neoclassical economics in class and that made me excited, because I had always wanted to learn about it.
- Classical economists assume that the most important factor in a product's price is its cost of production.
Meaning of Neoclassical economics & Neoclassical economics Definition