Classical economists assume that production costs are the most important factor in the cost of items. Neoclassical economists believe that the buyer's view of the cost of a product determines its cost. They consider economic surplus as the difference between the real cost of production and the retail price. Although in neoclassical theory the firm has little importance, it is central to post-Keynesian price study. In this essay I will clarify neoclassical value theory and post-Keynesian market theory. Say no to plagiarism. Get a tailor-made essay on “Why Violent Video Games Should Not Be Banned”?Get the original essayNeoclassical price theory dates back to classical economic ancestors such as Adam Smith and represents the belief in self-interest and individual autonomy. Smith proposed that self-interest motivates relationships between people in economic matters in particular and individuals who seek self-interest, primarily through generating wealth, when addressing market mechanisms. Neoclassical price theory also assumes that, given that individuals possess the full social value of each option, there is no externalization of any market exchange, given full knowledge of the alternative options. The prices of various goods represent the comparative cost of production to society under these assumptions. When prices work properly, buyers will “vote informed” when purchasing goods, ensuring the best mix of consumer choices for societies. Vendors should respond to customer votes and offer the most popular products, thereby increasing their usefulness. Rationality and its descendant, profit maximization, are another fundamental principle of neoclassical price theory. Neoclassical price theory assumes that when a choice is made in the market, people will actually be able to decide both what goals are desired and how best to achieve them. People have therefore clearly specified a choice and will choose the appropriate option or method to maximize utility or satisfaction for those who are motivated by self-interest. Therefore, a key attribute of the economy and the price mechanism is that its activity reflects both the needs and preferences of buyers and the shortage of inputs. Consumers face budget restrictions on the demand side, and neoclassical price theory assumes that when purchasing goods, consumers accurately calculate their financial restrictions. Rationality involves increasing income on the supply side. By combining labor and commodity capital and deciding how many goods to make and at what price, manufacturers rely primarily on maximizing profits. In each situation model, the principle of rationality transforms people, whether consumers or suppliers, into abstractions of how any intelligent person in that situation should act, without regard to psychological predilections, beliefs, values, tastes and the effect of social institutions. In perfect competition, the price of the product is not only the gain that consumers obtain from the good or the quality, determined by their willingness to pay, what they put on the good. The price also represents the costs of producing the good for suppliers, the costs of the company. The net effect is that manufacturers produce goods at the lowest social cost and can purchase them from any customer who likes the product)).