How are the limitations of the economics theory affected?
Limitation of Economic Theory:
While examining the generality of an economic theory, one must realize any assumption or theory has a boundary, restriction, and applicable range of economic theory. Therefore, two common misunderstandings into economic theory must be avoided. One misunderstanding is to over-estimate the role of an economic theory. Each theory is based onto some imposed assumptions. Thus, it is significant to remember that every theory is not universal, can’t describe everything, but has its restriction and boundary of suitability. While applying a theory to make an economic decision and discuss an economic problem, this is significant to notice the boundary, limitation, and applicable range of the theory. This cannot be applied arbitrarily, or an incorrect conclusion will be the consequence.