This theory has been criticized in the modern days because the thought is it cannot describe the actual economy at the time. The critic argues that assuming customers act logically when making decisions misses natural humanity’s propensity to emotional reactions (Zainuddin & Noranee, 2017). It is also blamed for inequalities in the global arrears and economic relations due to its argumentative nature. However, this theory states that short-term steadiness is said to be the outcome of fluctuating quantity of work and investment in the total factor productivity. According to neoclassical theory, the market forces result in an effectual utilization of capital.
Firstly, the model emphasizes how the confluence of three motivating factors, finance, effort, and expertise—principals to a continuous pace of financial expansion. Technological progressions have a noteworthy influence on entrepreneurship, and monetary progress cannot be unrelenting when they are deprived. Although the economy’s potential labor assets are restricted, technology’s expansion is limitless (DesJardins, 2021). Furthermore, according to monetarism, a business model has merit far beyond its expenses. Secondly, neoclassical theory is appropriate since it enhances self-satisfaction to consumers. This is because one may make purchase selections based on personal assessments of an item’s or service’s usefulness. The economists who believe in this theory claim that an item’s pricing is determined by the user’s sense of its worth. This idea is similar to rational behaviorism, which claims that individuals make logical judgments when it comes to money.
Finally, as per this theoretical framework, growth is mainly attributed to the optimal utilization of capital inside an ecosystem. The equilibrium price is created by the dynamics of producers and consumers. The neo-classical line of thinking, contrary to Keynesian economics, holds that resources dictate expenditure. It implies that perfect competition and comprehensive growth ought to be the key economic aims of the authorities.
References
DesJardins, j. (2021). An Introduction to Business Ethics (5th Ed.).
Zainuddin, A., & Noranee, S. (2017). Customers’ Emotional Reactions as Significant Predictors towards Excellent Customer Service Experiences. Advances in business research international journal, 3(1), 9. Web.