fundamental in economic law

Economics is a social science and like other social sciences, it has its own principles or laws. These laws tell us how man behaves under certain conditions. They also give us an idea about the results likely to follow certain conditions. A fall in price is accompanied by extension in demand. In other words ‘Economics laws of economic tendencies are those which relate to branches of conduct in which the strength of the motives chiefly concerned can be measured by a money price’. As the economic phenomenon are complex and varied, a number of factors influence the formulation of the basic principles which are nothing but generalizations and are called as laws.

In other words the fundamental assumption of economic analysis is that every individual acts in a sensible manner and it is sensible for the individual to balance marginal costs and marginal gains. Sensible conduct leads to maximum of money gains.

Thus, what are the fundamental and important assumptions on which all economic laws are formulated?

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