Price Theory need to be able to predict the consequences of alternative policies, and events that may be outside our controle. The tool we use to make such predictions is called a theory. A theory is of no use if its predictions are inaccurate. The theory of demand and supply is a example of an economic theory. It can be used to make predictions about the price and quantity of some commodity. In a free market economy, most economic decisions are guided by prices. Therefore, without a reliable theory of prices, you will get no where in economic analysis. click theory and prediction (demand and suply)

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