Eclassical Vs Neoclassical Economics

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From Classical to NeoClassical Throughout history, there has been much debate as to what dictates value of goods and services within economics. Over time theories have developed and changed. The Development of utility theory can perhaps be split into two classifications; classical economics and neoclassical economics. Classical economics includes economists such as Smith, Ricardo, and J.S. Mill, three economists who built the foundation for modern day utility theory. The period of classical economists thrived during the late 17th century and into the early 18th century and promoted the notion of production costs driving prices. In the 1870s there was a qualitative change in some economists’ approach to doing economics. This change was brought…show more content…
He went on to become a professor of logic, political economy, and philosophy, first at the university of Manchester, before later moving to University College London. Jevons was recognised for his development of marginal utility theory. His most notable piece of work was his book published in 1871, The Theory of Political Economy. One of the most renowned passages from the book is taken from the very first page and explains how Jevons belief of utility determining price differs from his predecessor Smith, whom believed price had been determined as a direct effect of the cost of labour. Again, as mentioned earlier in the text, if we propose the question of “Do pearls have value because people dive for them, or do people dive for pearls because they have value?”, Jevons’ response would be that people dive for pearls because of the utility in which pearls provide the consumer and so people dive for pearls in order to obtain utility from them; Utility drives value not the cost of labour, as Smith…show more content…
Jevons distinguished the difference between marginal utility and total utility. He stated that although, given the tools at hand he was not able to measure utility directly as a numerical figure, he was able to make comparisons between utilities of a single good upon successive additions of the good. Jevons stated that utility or in other words satisfaction or pleasure was a subjective concept in which he could only estimate. He did, however, state that it was possible to compare marginal utilities of various goods. Jevons illustrated his theory of diminishing marginal utility by analysing the relationship of utility and quantity of a good consumed

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