Neoclassical economics is a foundational framework in economic theory that operates on several key assumptions, including rational behavior, profit maximization by firms, market efficiency, and the existence of perfect information. This article examines these core assumptions, while also addressing the significant critiques that highlight their unrealistic nature and limitations in capturing real-world complexities, such as…

Classical economics is a foundational school of economic thought that emerged in the late 18th and early 19th centuries, emphasizing the self-regulating nature of free markets driven by supply and demand. Key figures such as Adam Smith, David Ricardo, and John Stuart Mill significantly contributed to its principles, with Smith’s concept of the “invisible hand”…

Environmental economics is a specialized field that analyzes the economic implications of environmental policies and practices. It focuses on the interaction between economic activities and environmental outcomes, evaluating costs and benefits associated with environmental protection. The article delves into various policy tools utilized in environmental economics, including market-based instruments like carbon taxes, regulatory measures such…

Post-Keynesian Economics is a school of thought that emphasizes the significance of uncertainty and effective demand in economic processes, challenging the efficiency of markets and the neoclassical focus on equilibrium. It critiques traditional economic theories and advocates for active government intervention to stabilize the economy, promote full employment, and address income distribution. The methodology of…

Behavioral economics is a field that examines the interplay between psychological factors and economic decision-making, highlighting how emotions, biases, and social influences can lead individuals to make irrational choices. Unlike traditional economics, which assumes rational behavior aimed at maximizing utility, behavioral economics reveals that concepts such as loss aversion and framing effects significantly shape consumer…

Keynesian Economics is an economic theory developed by John Maynard Keynes that emphasizes the importance of total spending, or aggregate demand, as the primary driver of economic growth and employment. This theory advocates for government intervention, particularly during economic downturns, to stimulate demand through increased public spending. Historical applications of Keynesian policies, such as the…

Institutional economics is a branch of economics that examines the influence of institutions—defined as the rules, norms, and organizations governing social and economic interactions—on economic behavior and performance. This article provides an overview of institutional economics, highlighting its key theoretical frameworks, including New Institutional Economics and Old Institutional Economics, as well as the Theory of…

Game theory is a mathematical framework used to analyze strategic interactions among rational decision-makers, focusing on players, strategies, and payoffs. This article explores the fundamental concepts of game theory, including its applications in economics, such as competitive behavior among firms, auction design, and negotiation strategies. It also addresses the limitations of game theory, highlighting assumptions…

Supply-side economics is an economic theory that focuses on enhancing economic growth by increasing the supply of goods and services through lower taxes and reduced regulations. This approach is believed to stimulate job creation and investment, with historical evidence from the 1980s supporting its potential benefits. However, supply-side economics has faced criticism for favoring the…