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Question
Give reason or explain the following statement:
Micro economic theories based on certain assumptions.
Solution
Microeconomic theories are based on certain assumptions.
Ans. Yes, I agree with this statement,
- Micro Economics makes partial equilibrium analysis. Micro economics is based on the assumption ‘Ceteris paribus’ (which means ‘other things being constant).
- Microeconomics also assumes conditions of full employment, pure capitalism, perfect competition, etc. in an economy,
- Thus, we can conclude that the Microeconomic theories are based on certain assumptions.
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