Economic theories are frameworks that help explain how economies function and how various factors influence economic behavior. These theories analyze the production, distribution, and consumption of goods and services, aiming to understand how individuals, businesses, and governments make decisions. Key concepts include supply and demand, market equilibrium, and the role of incentives. Different economic theories can be categorized into schools of thought, such as classical economics, Keynesian economics, and behavioral economics. Each school offers unique insights into economic phenomena, addressing issues like inflation, unemployment, and economic growth. By studying these theories, economists can develop policies to improve economic performance and stability.