neoclassical economics

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neoclassical economics

the approach to economic analysis, arising especially from the work of Alfred Marshall (1842-1924) and Leon Walras (1834-1910). This dominated ECONOMICS between 1870 and 1930. It replaced the explicitly sociopolitical analysis, in terms of land, capital and labour, which characterized the work of CLASSICAL ECONOMISTS, including MARX (see also POLITICAL ECONOMY), with a more formal analysis of the conditions for the optimal allocation of scarce resources. The approach can be described as ‘subjectivist’, since its central concept, utility, defined as the ‘individual’ satisfaction obtained from the consumption of a good or service, cannot be measured directly but can only be inferred from market behaviour. The approach is also known as marginal analysis, since its central assumption is that economic returns will be maximized whenever equilibria are reached in competitive markets, the point at which ‘marginal utilities’ or ‘marginal revenues’ cease (i.e. where no more of a good or service will be purchased, or where one more unit of production would yield a negative return). While earlier theories of VALUE based on the ‘costs of production’ found room for notions such as EXPLOITATION, no place exists for these in neoclassical theory. Thus it has been suggested that neoclassical economics be seen as involving special pleading on behalf of CAPITALISM AND CAPITALIST MODE OF PRODUCTION. Others, however, argue that the ‘marginal revolution’ in economics can be accounted for by the inherent superiority of this mode of analysis.
References in periodicals archive ?
For both the neoclassical model and the sticky price model, the income and substitution effects on labor supply nearly offset one another.
In contradiction to our conclusions in Part II, certain scholars nevertheless claim that behavioral economics can improve antitrust analysis by making more accurate predictions than the neoclassical model.
The neoclassical model conceives of the following one-period optimization problem faced by the manager of a business:
I have demonstrated, within the context of a simple neoclassical model, how a sequence of liquidity shocks can generate the phenomena under investigation.
Extending the Harrod-Domar model to include change in productivity, the neoclassical model assumes that capital and labor become less effective as more of each is employed.
1992) have also employed the basic neoclassical model to investigate the hypothesis of conditional convergence.
More specific to Chile, Chumacero and Fuentes (2006a) develop a two-sector neoclassical model that allows for a natural-resource sector, which is an endowment, and a productive sector that uses capital and labor.
This is an approach that is sometimes seen as a challenge to neoclassical orthodoxy because it seeks to explain human behaviour that deviates from that predicted by the neoclassical model of the rational self-interested individual.
The results show the dominance of two conceptions of the gene: the Neoclassical model and the Mendelian model.
The present paper applies a similar market-clearing analysis to the neoclassical model of imperfect competition in which firms may produce differentiated products, and for which long run equilibrium is described as ATC = P > MC.
The Ramsey growth model is a neoclassical model of economic growth based on the work of Ramsey, whose idea was to determine the saving rate endogenously, through a dynamic maximization process.
There's some ability, some maneuvering, in the pay structure that the competitive neoclassical model doesn't recognize.