Microeconomics studies the economic actions and behaviour of individual units and small groups of individual units. In microeconomic theory we discuss how the various cells of economic organism, that is, the various units of the economy such as thousands of consumers, thousands of producers or firms, thousands of workers and resource suppliers in the economy do their economic activities and reach their equilibrium states. In other words, in microeconomics we make a microscopic study of the economy.
In this essay we will discuss about Economic Theory. After reading this essay you will learn about: Meaning of Economic Theory 2. Nature of Economic Theory 3.
Economic Theory and Economic Policy 6.
Meaning of Economic Theory: Economics is a science which like any other science depends on an organised body of theoretical knowledge. Theoretical knowledge is based on facts. And facts based on verified hypotheses are raised to the status of a theory.
What is a Theory? A theory expresses a causal relationship between cause and effect. It consists of a set of definitions stating clearly what we mean by various terms, and a set of assumptions about the way in which the world behaves.
The next step is to follow a process of logical deduction to discover what is implied by these assumptions. These implications are the predictions of our theory which can be tested by the process of observation and statistical analysis of the data.
If the theory passes the test no consequent action is made necessary. If the theory is refuted by the fact, it is either amended in the light of newly acquired facts or is discarded in favour of a superior competing theory.
Economic theory is a theory in this sense. It is meant to be about the real world. Nature of Economic Theory: Economic theory involves generalisations which are statements of general tendencies or uniformities of relationships among various elements of economic phenomena.
A generalisation is the establishment of a general truth on the basis of particular experiences. For example, the generalisation that demand is an inverse function of price expresses a relationship between price and demand, other things remaining the same.
If other things remain the same, the law of demand holds valid. If other things do not remain the same, it stands refuted. Steps of Economic Theory: The various steps required to construct a theory of economics are detailed below: The first step in the formulation of a theory is the selection of the problem which must be stated clearly and correctly.
The problem to be explored may be very wide like poverty, unemployment, inflation, etc. The narrower the problem, the better it would be for a researcher to conduct his enquiry satisfactorily. The second step is to collect data or facts pertaining to the problem to be explored.
If the problem is simple the data can be easily collected.Economic Theory and Application Essay. B. Pages:2 Words This is just a sample. To get a unique essay.
It is an economic theory regarding oligopoly and monopolistic competition. b. Identify the firm’s profit-maximizing output and price. We will write a custom essay sample on Economic Theory and Application specifically for you for. Essays on economic theory and applications.
Dept. of Economics. MICROFICHE COPY AVAILABLE IN ARCHIVES AND DEWEY. Includes bibliographies. Ph.D. Search (Ex: crystalline silicon solar) Search Within This Collection Advanced Search DSpace @ MIT Essays on economic theory and applications. It bridges economic theory and economics in practice.
Managerial economics provides a set of tools, techniques, methodologies, guidance and insights that can help in making better and value-adding decisions in business and for analyzing decision problems and developing criteria for choosing the best possible solution to problems.
Writing Economic Theory Papers by Simon Board and Moritz Meyer-ter-Vehn Varian () is a wonderful essay, expressing his personal approach.
In comparison, this paper seeks to be more of a “how to” guide. Thomson () is a comprehensive and well The model speaks to an important application. For example, applying matching theory to.
The format of most research papers—theory, applications, empirical evidence, policy implications—is consistent with this common approach to economic analysis. Economics: Micro and Macro Theory and Application Outcome1 1.
In economics, and cost accounting, total cost (TC) describes the total economic cost of production and is made up of variable costs, which vary according to the quantity of a good produced and include inputs such as labor and raw materials, plus fixed costs, which are .