Difference Between Neoclassical And Neoclassical Economics

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Neoclassical economics is an approach to economics that focuses on the maximization of utility, with neoclassical theory operating under several assumptions that contribute to the maximization of utility. One such tenant of neoclassical thought is the presence of scarcity. Scarcity, as defined by economist Lionel Robbin, exists when an individual making a choice must forego alternatives that the individual would not wish to forego (Robbins 1932, p. 15). The presence of scarcity leads to the second tenant of neoclassical economics, which is the deliberate actions of individuals and firms to maximize their utility under scarce resource conditions. In maximizing utility, it is assumed that an individual or firm works in an axiomatic system, meaning that they can define their utility in a numeric sense (Fishburn 1970, p. 1). When utility is defined in a numeric sense, the process of maximizing utility is simply choosing the option in which the individual or firm derives the most utility. Furthermore, neoclassical economics operates under the theory of rational choice, meaning that individuals and firms are perfectly rational and have complete knowledge of the economic choices that they make (Schiliro 2012, p. 101). In addition to making their choice rationally and with complete knowledge, it is assumed that individuals do not allow their emotions to influence decisions under the theory of rational choice (Schiliro 2012. P. 101). From the three above mentioned assumptions, we can
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