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Give Reasons Or Explain the Following Theories of Microeconomics Are Based on Certain Assumptions. - Economics

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Question

Give reasons or explain the following

Theories of microeconomics are based on certain assumptions.

Solution

Microeconomics is based on certain assumptions. It assumes that there is full employment, laissez fair policy, pure capitalism, perfect competition, etc. However, all these assumptions neglect the dynamic and changing environment and make the microeconomic study static. Thus, we say that the assumptions are unrealistic in nature.

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2013-2014 (March)

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