Neo-Classical Economics-Questions and Answers Graded A+
Neo-Classical Economics-Questions and Answers Graded A+ Basic Principle 1 of Neoclassical Economics - ANSWER-Human nature is inherently selfish but rational Basic Principle 2 of Neoclassical Economics - ANSWER-Rational individuals try to maximize pleasure and benefit or personal utility, while minimizing pain and cost. Basic Principle 3 of Neoclassical Economics - ANSWER-The rational pursuit of self-interest is institutionalized in the market. -Market voluntary exchange among rational individuals in pursuit of own pleasure, benefits etc. Basic Principle 4 of Neoclassical Economics - ANSWER-Capitalism, system of private property and free markets, makes freedom possible. -core liberty isthe right to have property and rise of maximum potential through participation in the market. Basic Principle 5 of Neoclassical Economics - ANSWER-The market is the most efficient way of organizing economic behavior. *it leads optimal equilibriums; stable outcomes in which supply and demands at the lowest cost and with the least waste. Basic Principle 10 of Neoclassical Economics - ANSWER-When the market operates without interference, people deserve their fate. The poor and other losers are lazy or incompetent. Government and welfare don't help losers. Basic Principle 11 ofNeoclassical Economics - ANSWER-Market goes through natural cycles of growth and contraction. -self correcting in the long run. -Interference with regulations and taxation make it worse. The paradox of government - ANSWER-" can't live with it, cannot live without it" -Neo-classical economist know markets need social norms, rule of law but this fact contradicts core intents. Adam Smith on Neoclassical economics - ANSWER-"don't try to do good. let it emerge as a byproduct of selfishness" Alfred Marshall of Neoclassical Economics - ANSWER-Builds on classical political economics with theories of marginal utility, supply and demand, optimal equilibrium of prices. -coined the word "Economics" Neo-Classical Economics - ANSWER-says that human economic behavior is universally self interested, profit-seeking and maximizing. We can create mathematical models to predict and/or explain economic behavior based on this assumption. -supply & demand
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