Question

What are some relevance of economic theories and modeling and give specific examples that illustrate them.

Answer 1

Economist see the world through a different lens then anthropologist, biologist etc. They analyze issue and problems with economic theories that are based on particular assumptions about human behaviour that are different then the assumptions. The economic theory is a simplified representation of how two or more variable interact with each other.the purpose of a economic theory is to explain a comples or real world issue and simplify it down to its essentials.a good theory is simple enough to be understood while complex enough to capture the key features of the situation.

Economist use the process of modelling or use models to explain theory because modelling is more applied or empirical form of presentation.modelling is used to test theories to get the immidiate result

For example - an architect who is planning to build a office building often make diagrams or his planning and build a minature physical model to explain his theories and ideas.same as in economics theories a better explained with flow chat diagrams and graphs. The main tools and economist use are economic theories and models to better execution and explanations.