Publisher's Synopsis
The difference between new and old economic theories solve tourism and oil industries challengeWhy is economic theory, a worthwhile thing to do ? e.g. helping organizations to solve challenges, helping society to solve challanges in macro economic view, part of the attraction and the promise of economics is that it cliams to decribe policies that will improve people's lives. This is unlike most other physical and social sciences. Sociology and political science have a policy component, but for the most part, they are concerned with understanding the function of standards of living, but this is really a by-product of science as an intellectual activity matters, physical science, has the potential to improve people standards of living.What is the role of theory in a policy science? When my view that economic is a policy science. I mean that however either old or new economic theories one useful in policy. Theory is as a substitute for data. For example, we want to determine how a market price will respond to a tax, we could estimate this effect by running a regression of market price, against tax rates, controlling for as many other variable as possible. This would give us an equation that we could use to product how prices respond to change in taxes of one country has many unemployment people, then if it's government change a little 2 to 3 % import tax to private cars. Then, it may cause the country's car buyers number to import car demand decreases. The elastic to car import tax is high because the country has many people are unemployment. Hence, society is continue changing. So, some economists will research how to apply old economic theories to change other new theories to attempt to solve social and organizational challenges.In new economic theories, they are applied new modelling techniques to old real world problems, they add something to economic knowledge to the extent that we accept formalisation as a source of progress in economic. Some economists focus new economic theory on the dynamic of regional growth and economic activity aspect. When the former foucs on long-run regional growth and later is linked to the " new growth theory". For example, the traditional trade theory is unable to explain the existence of different production structures, e.g. the country's geographical positions in similar regions. Also, trade should lead to conflice face greater market competition and loose incomes. Finally, countries having complementary factors were the best condidates to the formation of trading, so that they will specialize in different commodities. In addition, the traditional trade theory performs poorly when there is high mobility of production factors. I shall indicate what the difference between new and old economic theories below: In old economic theories, they may include: Scarcity means that the condition in which our wants and greates than our limited resources. So, we must make choices on how we will use resources. Hence, economic-social concerned with the efficient use of limited resources to achieve maximum satisfaction of economic wants; micro-economic studies such as individuals, firms and industries ( competitive markets, labour markets, personal decision making etc.) Otherwise, macro-economics studies the large economy as a whole or in its national economic growth. Government how spends, inflation, unemployment etc. Marginal analysis involves making decisions based on the additional benefits vs. the additional cost.
