Introduction to Economic Theory
Each tour covers a variety of economic theory related to the issues raised in the tour. In the Rural Life and Agriculture Tour the following theories are considered:
- Alternative Indicators of Poverty
- Commodity Agreements
- Composite Indicators of Poverty and Living Standards
- Economies of Scale and Commercial Farming
- Income Elasticity of Demand
- Infant Industries
- Instability in Commodity Markets
- Internal Economies of Scale
- The Lorenz Curve and Gini Coefficient
- Malthus and the Law of Diminishing Returns
- Measuring Poverty
- Perfect Competition
- Poverty and the Cycles of Poverty
- Price Ceilings
- Producer Subsidies
- The Coffee Market
- Using GDP Data to Make International Comparisons
Economists use economic theories and model for essentially two reasons:
- To enable a better understanding of a particular economic problem.
- 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.
