Introduction to Economic Theory

During the course of the Copper Tour you will be given the option of considering a number of economic theories and discussions that are relevant to one or more of the economic issues that you come across on the tour. Hopefully they will help you understand more about the issue. The theories covered in the Copper Tour are:

• Supply Side Approaches
• The Dependency Ratio
• Dependency Theory
• Economic Efficiency
• Economic Growth and the Production Possibility Frontier
• Models of Economic Growth and Development:
  • Fisher Clark's Theory of Structural Change
  • The Harrod-Domar model
  • The Lewis Model of Development
  • Rostow's Model - the Stages of Economic Development
  • Models of Demographic Transition
• Measuring the Circular Flow of Income
• Neo-classical Theory
• Population Pyramids
• Price Movements of Primary Commodities
• The Arguments for Privatisation
• The Causes of Economic Growth
• The Causes of Inflation
• The Impact of Multinational Enterprises
• The Theory of Externalities
• The Problems Associated with Inflation

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Economists use economic theories and model for essentially two reasons:

1. To enable a better understanding of a particular economic problem.
2. To allow predictions to be made about the effect of changes in variables, policies and strategies.

Many students new to economics find the constant desire to express what on the face of it seems to be a common sense assertion frustrating. Particularly when many of the models used are based on simplifying assumption. Nevertheless reality is often very complex and influenced by numerous interconnected variables. Often assumptions such as ceteris paribus must be made if we are going to be able to isolate certain variables and consider the impact of a change in these.

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