--%>

Good theory

It is frequently said that a good theory is one which can in principle be refuted by an empirical, data-oriented study. Describe why a theory which cannot be evaluated empirically is not a good theory.
In evaluating theory there are two steps: firstly, you have to examine the reasonability of the theory's assumptions; secondly, you have to test the theory's predictions by comparing them with facts. If a theory cannot be tested, it cannot be accepted or rejected. Hence, it contributes little to our understanding of reality.

   Related Questions in Microeconomics

  • Q : Market structure in an automotive

    What type of a market structure in an automotive industry?

  • Q : Condition for long-run equilibrium

    Which of the given is NOT a condition for long-run equilibrium into a purely competitive market: (w) P = MC (x) MR = MC (y) P = LRAC (z) TFC = TC Can anybody suggest me the proper explanation for given problem rega

  • Q : Kinds of economic capital All kinds of

    All kinds of economic capital: (w) require construction of machines and buildings. (x) represent money. (y) are forms of output used for further production. (z) yield profit for their owners. Hello guys I want your

  • Q : Income elasticity of demand when

    When average income rises from $18,000 to $22,000 yearly and yearly gasoline consumption per household increases from 1000 to 1500 gallons, in that case the income elasticity of demand for gas is: (1) in the inferior range. (2) 0.5. (

  • Q : Perfectly price elastic demand For

    For Cournot’s Spring Water the demand is perfectly price elastic at:  (i) point a. (ii) point b. (iii) point c (iv) point d. (v) point e.

    Q : Thought of economists for law of equal

    Explain different thought of economists for law of equivalent marginal advantage.

  • Q : Potential inefficiencies and inequities

    Whenever someone paying for the service can’t completely monitor the behavior or aims of the person offering the service, there are potential inequities and inefficiencies caused by the: (1) Moral hazard. (2) Adverse selection. (3) Utilitarianism. (4) Principal-

  • Q : Resources to escape state of destitution

    When an individual or family lacks adequate resources to escape a state of destitution, their circumstances are described as: (1) involuntary poverty. (2) relative poverty. (3) a vicious cycle of poverty (4) institutional poverty. (5) a culture of pov

  • Q : Price Elasticity-Income Elasticity and

    When both population and per capita income grow across time, in that case your income will tend to be most erratic but the goods you sell are: (1) both income inelastic and price inelastic within demand. (2) a large part of classical

  • Q : Affect of total utility to marginal

    Whenever total utility is at a maximum, then marginal utility is: (1) Rising. (2) Reducing. (3) Zero. (4) Similar as total utility. Can someone help me in getting through this problem.