![]() ![]() Information or misinformation about the good or the use of it.Potential consumers’ buying behaviour is influenced by the next determinants of demand: Important in economics is the interaction between supply and demand. Within theories there is a distinction between positive statements, a testable hypothesis about cause and effect, and normative statements, a conclusion as to whether something is good or bad. Economic theories are the development and the using of models to test hypotheses, predictions about cause and effect. Economists make use of models, which describe the relationship between two or more economic variables. ![]() It studies the allocation of scarce resources, often called the price theory, to show the important role of prices. Microeconomics is the study of how individuals and firms make themselves as well as off as possible in a world of scarcity and the consequences of those individual decisions for markets and the entire economy. Back to top Chapter A: The supply-and-demand model
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