Economics

Classical Economics

An economic school characterized by laissez-faire markets, emphasizing minimal government intervention, and the 'invisible hand' of supply and demand.

Neoclassical Economics

An economic theory that emerged in the 1900s, focusing on marginal utility and setting value based on consumer satisfaction rather than production costs.

Austrian Economics

An economic school that emphasizes personal decision-making in economic outcomes, subjectivism in value, and the negative effects of government intervention.

New Institutional Economics

A branch of economics that considers the role of institutions and transaction costs in shaping economic outcomes, evolving from neoclassical economics.

Price mechanism

The process by which supply and demand interact to determine the market price of goods and services.

Laissez-faire

An economic philosophy of free-market capitalism that opposes government intervention in the economy.

Comparative Advantage

The ability of a country to produce a good at a lower opportunity cost than another country, leading to beneficial trade.

Marginal Utility

The added satisfaction or value gained from consuming one additional unit of a good or service.

Bounded Rationality

The concept that economic agents operate under limitations that prevent them from making fully rational decisions.

Transaction Costs

The costs involved in the exchange of rights, including searching, information, and enforcement costs.

Invisible Hand

A term coined by Adam Smith to describe the self-regulating nature of the marketplace.

Supply and Demand

The relationship between the quantity of a commodity available and the desire for that commodity, determining its market price.

Division of Labour

The allocation of different tasks to different individuals in an economy, increasing productivity.

Price Elasticity of Demand

A measure of how much the quantity demanded of a good responds to a change in price.

General Equilibrium Theory

An economic theory that describes how prices are determined in a market economy through the interplay of supply and demand.

Subjectivism

The principle that value is not inherent in objects but is determined by individual preferences and perceptions.

ØWhy Study economic schools of thought?

Offers diverse perspectives on economic issues.

•Exploring economic schools of thought unveils diverse perspectives on the functioning of economies.