Economic Theory

 

An economic theory is a theory (system of ideas) or principle(s) for how an economy should be organized.

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Example:

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The business owner was concerned that the cost of wages was becoming so hight that it was driving up the price of his products leading to a decrease in sales.  According to basic market economic theory, he would need to find a way to bring down costs in order to keep the price of his products low enough that people would buy them or he would go out of business within the year.  

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See:  Supply and Demand