Microeconomic Principles essays

Microeconomic Principles essays In studying economic activities and concepts, there are two dominant modes of thought that come to the forefront; neoclassicism or the mainstream view and Austrian economics. These two schools of thought have points of contention on many different issues and theories found in the analysis of economic events. Several literary works have been written detailing the differences between the two approaches, although they have been subject to much criticism by the Austrian school. The major distinctions outlined by many authors include: praxeology, indifference, cardinality, continuity, probability, mathematical analysis, and public goods. Praxeological analysis is the basic foundation for the entire Austrian approach to economic observation. Human action is the most important and defining concept in Austrian economics. Human beings act, and the choices they make are based on motives or not-yet realized parts which explain the behavior and thoughts that they exhibit. This basic notion allows for the Austrian school to build an approach based on human action, and the means they use to get to an end. Neoclassical economics differs in the sense that they seek to explain human action in terms of value and choice with their foundation firmly embedded in utility. In short, neoclassical value theory not only stresses that what we feel determines how we behave. It presupposes that there are constant relationships between our feelings on the one hand, and our behavior on the other hand that can be studied and described by the neoclassical consumer theory. (Hulsman, 5) The Austrian school maintains that neoclassic ec onomics waste their time in calculating maximization and equilibrium to describe human behavior. They contend that there are no laws that govern what any one person will do in a given situation. Indifference is a simple concept that has brought about many heated debates in economi...