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Difference Between Neo Classical Economy And Neoclassical Economy

Decent Essays

INTRODUCTION TO POLITICAL ECONOMY

SUBMITTED BY: -
DIVYA MISHRA(ROLL NO: - 03)
SOCIAL INNOVATIONS AND ENTREPRENEURSHIP (M.A 1ST YEAR) 1ST SEM
SUBMITTED TO: - Dr.SRI KRISHNA SUDHIR PATOJU SIR

Q-1 Difference between classical political economy and neo classical economy
Ans- The school ofclassical economics came into existence around 1750 and remained till 1800’s.The book titled “wealth of the nations” written by adam smith in 1776 was beginning period of classical economics that ended with “marginalized revolution”and thus neoclassical economics developed. Neoclassical economics was just an extension of classical economics but the fundamental …show more content…

He was the first economist to deal with economic problems in a systematic manner. In this book he emphasizes importance of labor as source of wealth of a nation which can be increased by division of labor .Division of labor necessitates exchange. So it leads to discussion of money as a means to exchange.He discusses some problems like wages,profits and rent after discussing the problems of value and price.
Division of labour-Unlike psysiocrats who regarded only land as the productive factor and agriculture as source of all wealth Adam smith regarded labor as the wealth of the nation .He argued that division of labour will increase productivity hence will increase the wealth of the nation.According to Adam smith ”division of labour is limited mainly by size of market”. That is only if there is a wide demand of goods ,it will be produced on a large scale and there will be lots of scope for division of labour
Value-According to smith there are two kinds of values value in-use and value in- exchange.The first one expresses utility of a particular object and the second power of purchasing other

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