refers to a school of economic thought that emphasizes the idea that markets are self-regulating and tend towards equilibrium through the interactions of supply and demand.
Think of classical economics as a game of tug-of-war, where the forces of supply and demand are constantly pulling on opposite ends. The goal is to find a balance point where both sides are equally matched, representing the equilibrium state.
Neoclassical economics: A branch of economics that builds upon classical economic principles but incorporates more modern theories and concepts.
Invisible hand: The concept in classical economics that describes how individual self-interest can lead to societal benefit through market mechanisms.
Equilibrium price: The price at which the quantity demanded by consumers equals the quantity supplied by producers in a market.
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