The production of goods and services for profit maximization for economic analysis is emphasized under the classical school of economics. On the other hand, the neo-classical economists focus on the ways with which the individuals operate in the economy. Thus the focal point of emphasis for neo-classical economists is the exchange of goods and services (Dutt, 2011). The approach of neo-classical economist is of a trade-off approach which is a situation of compromise and that provides reasonableness to it. On the other hand, they assume a condition of zero-sum. In case of public polices the trade off approaches turn out to be ineffective and against the situation of stand offs. In such situations, the individuals do not get exactly what they desire and the possibility of reconciliation is also overlooked in this.
The value on profits is placed by both the classical school of economics and the neo-classical school of economics but in different forms. For classical economics, the profit is the return earned by the capitalist for his business activities in a socially useful manner. The problem of classical value theory is circumvented by this as if the value of the products is equal to the costs incurred on its production then here is no question of profit generation (Cockshott, 2011). On the other hand, neo-classical economist’s definition for profit is quite simpler. As the neo-classical economists profits are the surplus incomes earned by the firms over the costs incurred by them on the production of goods. In case the supply and demand for the product of a firm lead to the higher prices in comparison to the cost of production of the goods in terms of labor costs and capital used. In such cases, a different equilibrium of prices s there for the goods and its components.