Neoclassical And Neoclassical Theory

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In this paper you will further your knowledge on neoclassical economics as well as the three different variations of neoclassical economics interpreted by economists like Arthur Cicil Piguo and Joseph Schumperter. Another economist we will get into is John Maynard Keynes. We will answer the question on whether Keynes economic work either a devastating critique of the neoclassical theory, a new approach the can be effectively integrated with the neoclassical theory or if his work implied only some minor changes in the basic neoclassical model which is still adequate today. To begin we must first understand what Neoclassical Economics actually covers and is all about. Thorstein Veblen first brought up the term neoclassical economics in the early 1900’s. What many economics believe that follow neoclassical economist believe is that everyone wants to maximize there own personal utility and will make all of there decisions based on this concept. It is thought that everyone essentially thinks like this to maximize his or her personal satisfaction. Also, that everyone makes this decision when they have fully understand the utility they will gain from each decisions thus leading to the decision with the highest utility for themselves. People do not just make such decision unknowingly because if they did that then they would not know if they would actually be choosing the best option for themselves in the end. There are three main versions or assumptions of neoclassical economics that are followed by economists. The first is people tend to have rational preferences between outcomes. Secondly that people will try to maximize utility and firms will try to maximize their profits. The last is that individuals will act independently as well ... ... middle of paper ... ...ent. This adds on to the view from neoclassical economics that it will help bring about utility maximization and profit maximization. Keynes at points did just tweak a few things in neoclassical economics but he also added to the original view thus further elaborating on some of the views expressed originally. Concluding some of the main points of neoclassical economics are how people tend to seek personal interest which leads to greedy behavior, people have rational preferences of outcomes and in the end the consumer is in control of the economics forces in the market like the price and demand. Piguo and Schumpeter had challenged the paradigm of neoclassical economics by expressing their own views and theories on such economic topics. Keynes not only challenged some of the views of traditional neoclassical economics but also added to some of the original thoughts.
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