Question

Which interpretation of the graph is an example of an economic theory?

Answer 1

Answer: Option A.

Explanation: Here we see the sales of both stores, A and B, where in the graph we can see that Store A has decreased their sales, while Store B is increasing their sales.

Options A, B and C talk about things that we can see in the graph, that is exact.

A theory is an idea that we can interpolate about the information in the graph, is a fact that Store A sells less than B and its a fact that store A has decreasing sales while Store B is increasing sales. (Customers of A started to buy in Store B, this is why there are fewer sales in A and more in B)

This is because there are a limited number of customers, and this means that if one of the stores increase their sales, the other store must decrease their sales. Here we are watching an example of the competition theory.

Answer 2

An economic theory is a theoretical construct representing economic processes by a set of variables and a set of logical and/or quantitative relationships between them. So from the choices above, the answer would be D because it compares Store A and Store B and makes a theoretical guest on how it would improve its sales.