ANSWER & EXPLANATION:
What Is Neoclassical 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
ECONOMY ECONOMICS
Neoclassical Economics
By WILL KENTON Reviewed by ROBERT C. KELLY
Updated Jun 4, 2021
What Is Neoclassical 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.
KEY TAKEAWAYS
Classical economists assume that the most important factor in a product's price is its cost of production.
Neoclassical economists argue that the consumer's perception of a product's value is the driving factor in its price.
They call the difference between actual production costs and retail price the economic surplus.
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.
Neoclassical economics theories underlie modern-day economics, along with the tenets of Keynesian economics. Although the neoclassical approach is the most widely taught theory of economics, it has its detract
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