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Economics 10th Edition by William McEachern
Edition 10ISBN: 978-1133188124Economics 10th Edition by William McEachern
Edition 10ISBN: 978-1133188124 Exercise 1
ROLE OF THEORY What good is economic theory if it can't predict the behavior of a specific individual?
Explanation
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Individual behavior cannot be predicted:
Similar to other social sciences, economics also attempts to study the human behavior on the basis of certain assumptions that lead to understanding social phenomena.Since there is randomness in individual human behavior, it is very difficult to measure and control many factors that influence individual behavior. Hence, it is impossible to explain or predict a particular individual. But, in economics, groups of individuals or human behavior can be predicted on the basis of certain assumptions.
Example:
Demand theory states that increases in price of a good will reduce the quantity demand for that good by rational group of individuals rather than any particular individual.
Similar to other social sciences, economics also attempts to study the human behavior on the basis of certain assumptions that lead to understanding social phenomena.Since there is randomness in individual human behavior, it is very difficult to measure and control many factors that influence individual behavior. Hence, it is impossible to explain or predict a particular individual. But, in economics, groups of individuals or human behavior can be predicted on the basis of certain assumptions.
Example:
Demand theory states that increases in price of a good will reduce the quantity demand for that good by rational group of individuals rather than any particular individual.
Economics 10th Edition by William McEachern
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