Neoclassical economics relates supply and demand to an individual’s rationality and his ability to maximize utility or profit. Buyers attempt to maximize their gains from getting goods, and they do...

Neoclassical economics relates supply and demand to an individual’s rationality and his ability to maximize utility or profit. Buyers attempt to maximize their gains from getting goods, and they do this by increasing their purchases of a good until what they gain from an extra unit is just balanced by what they have to give up to obtain it. In this way they maximize “utility”–the satisfaction associated with the consumption of goods and services. Likewise, individuals provide labor to those that wish to employ them, by balancing the gains from offering the marginal unit of their services (the wage they would receive) with the disutility of labor itself–the loss of leisure. Individuals make choices at the margin.