Neoclassical economics

Neoclassical economics is an approach to economics in which the production, consumption and valuation (pricing) of goods and services are driven by the supply and demand model.[1][2] According to this line of thought, the value of a good or service is determined through a hypothetical maximization of utility by income-constrained individuals and of profits by firms facing production costs and employing available information and factors of production. This approach has often been justified by appealing to rational choice theory,[3] a theory that has come under considerable question in recent years.

Neoclassical economics dominated microeconomics and, together with Keynesian economics, formed the neoclassical synthesis which dominated mainstream economics as neo-Keynesian economics from the 1950s to the 1970s.[4] It competed with new Keynesian economics as new classical macroeconomics in explaining macroeconomic phenomena from the 1970s until the 1990s, when it was identified as having become a part of the new neoclassical synthesis along with new Keynesianism. There have been many critiques of neoclassical economics, a number of which have been incorporated into newer versions of neoclassical theory, whilst some remain distinct fields.