Explain the roles of economics theory, Microeconomics

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Explain the roles of economics theory.

Roles of Economic Theory

An economic theory has three probable roles:

a. This can be used to describe economic behavior and economic phenomena into the real world.

b. This can make scientific predictions or deductions regarding possible outcomes and effects of adopted economic mechanisms while economic environments and individuals’ behavior are suitably described.

c. This can be used to refute faulty objectives or projects before they are actually undertaken. When a conclusion is not probable in theory, then this is not possible into a real world setting, as long as the assumptions were approximated realistically.


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