Assumptions of Classical Economics which Do Green Critics

An abstract is required. Green economics states that in the world we live in, needs looking after and if our daily transactions or dealings with each other affect the natural atmosphere, then it should be taken into account in decision making. As the natural resources are scarce, we can not use them wastefully, thus, our use of them should be noted. Besides, as our actions affect other human beings, such as a business decision affecting its consumers, suppliers, workers, shareholders, bank, the society, and community, etc, our actions can also affect non-human things such as plants, animals, the environment or the ecology and the different natural systems that exists around us.

Green economics broadly encompasses the natural environment too while talking about social justice and other economic matters and has questioned some of the assumptions made by classical economics. For this reason, it is often called non-neoclassical economics. Neo-classical economics, also called the marginalist school, is a general approach to economics and its centers and revolves around the market, the demand and supply decisions that determine the price and the output produced and also the resulting income distribution that occurs after the transactions are made. These decisions usually come about after consumers or individuals make utility-maximizing and rational decisions despite a limited income and after firms employ the maximum use of resources, information within the budget constraints. Firms and individuals also act separately on the basis of information and they have perfect knowledge.

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The assumptions of neoclassical theories include the profit-maximizing behavior of firms and the derivation of demand curves from the consumer indifference curves and budget lines to maximize their&nbsp.utility. Factors of production are analyzed by supply curves. It emphasizes on equilibrium and the aggregation of individual and firms’ demands and supply curves.&nbsp.

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