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Theories and Models
?? Microeconomic Analysis
– Theories are taken in use to describe the observed phenomena in terms of a set of essential rules and hypothesis. For instance
– The Theory of Consumer Behavior
– The Theory of the Firm
– Models:
A mathematical interpretation of a theory utilized to make a forecast.
– Validate a Theory
The validity of a theory is checked by the quality or value of its prediction, known by the assumptions.
– Evolving the Theory
Examining and refining theories is essential to the development of the science of economics.
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