Neoclassical theory is an approach to economics that focuses on the production, consumption, and valuation of goods and services as driven by the supply and demand model. It emerged as a theory in the 1900s and is based on the idea that a consumers first concern is to maximize personal satisfaction, also known as utility. Neoclassical economics emphasizes the choices (demand) of consumers, and the value of products and services are above their costs of production. The theory is based on methodological individualism and adopts an atomistic approach to social phenomena, according to which social atoms are the individuals and their actions.

From the basic assumptions of neoclassical economics comes a wide range of theories about various areas of economic activity. For example, profit maximization lies behind the neoclassical theory of the firm, while the derivation of demand curves leads to an understanding of consumer goods, and the supply curve allows an analysis of the factors of production. Neoclassical economics is criticized for its over-dependence on complex, unrealistic mathematical models, and its lack of empirical science.

In summary, neoclassical theory is a broad approach that attempts to explain the production, pricing, consumption of goods and services, and income distribution through the supply and demand model. It is based on the idea that consumers aim for customer satisfaction and make purchasing decisions based on their evaluations of the utility of a product or service.