Theories and models are explanations of how things work that help us understand and predict how and why economic agents like consumers, producers, firms, government, etc. behave they way they do.

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The statement is true. Theories and models are tools used in economics to provide explanations of economic behavior and outcomes. They help us to understand and predict how economic agents will behave in response to different factors and conditions.

Theories and Models Are Explanations of How Things Work That