Understand the Problem
The text discusses the construction of economic theory, outlining steps such as specifying postulates, observing relevant facts, applying logic to establish causal relationships, and testing hypotheses. It emphasizes the ongoing nature of economic theory and the distinction between positive and normative economics.
Answer
Constructing an economic theory involves specification, observation, logic application, and hypothesis testing.
The process of constructing an economic theory involves specification of postulates, observation of relevant facts, application of logic to establish causal relationships, and hypothesis testing.
Answer for screen readers
The process of constructing an economic theory involves specification of postulates, observation of relevant facts, application of logic to establish causal relationships, and hypothesis testing.
More Information
Economic theories are always evolving. They involve explaining the nature of economic activities and predicting changes.
Tips
Common mistakes include not thoroughly testing hypotheses and failing to differentiate between relevant and irrelevant facts.
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