BACHELOR OF BUSINESS ADMINISTRATION

Detailed explanation-1: -An economic model is a hypothetical situation containing multiple variables created by economists to help understand various aspects of an economy and human behavior. One of the most famous and classical examples of an economic model is that of supply and demand.

Detailed explanation-2: -Most economic models rest on a number of assumptions that are not entirely realistic. For example, agents are often assumed to have perfect information, and markets are often assumed to clear without friction. Or, the model may omit issues that are important to the question being considered, such as externalities.

Detailed explanation-3: -But each of these theories can be very useful for yielding significant insights for how a particular market functions. No theory in economics is ever exactly true. The important question is not whether or not a theory is true but whether it offers a useful insight in explaining an economic phenomenon.

Detailed explanation-4: -An economic theory is a set of concepts and principles that define how various economies work. An economist may use theories for a variety of goals, depending on their specific function. Some theories, for example, seek to explain why certain economic events, such as inflation or supply and demand, occur.

Detailed explanation-5: -Economics is generally regarded as a social science, which revolves around the relationships between individuals and societies. Critics argue that economics is not a science due to a lack of testable hypotheses and ability to achieve consensus.