Economic theory refers to a set of principles and concepts that explain how individuals and societies make decisions about the allocation of resources, such as money, time, and effort.
Related terms
Supply and Demand: The principle that the availability (supply) and desire (demand) for a product or service determine its price.
Opportunity Cost: The value of the next best alternative given up when making a decision.
Incentives: Factors that motivate individuals to act in certain ways based on rewards or punishments.