Define the concept of economic modelling, and identify ways in which different models may be appropriate for different economic problems.

Industrial capitalism,markets and economics

Learning outcomes

After reading this chapter you should be able to:

. identify a number of different theoretical approaches in economics;

. distinguish between the assumptions made by different theoretical approaches;

. define the concept of economic modelling, and identify ways in which different models may be appropriate for different economic problems;

. distinguish economic theories employing equilibrium analysis from those that do not;

. apply demand and supply analysis to changes in competitive markets and the problem of externalities;

. apply game theory to analyse an economic coordination problem such as climate change mitigation.