ABSTRACT
Current Economics Textbooks and Economists justify a theory of consumer behavior based on utility maximization on a priori grounds. This methodology follows Lionel Robbins’ idea that economic theory is based on logical deduction from postulates which are “simple and indisputable facts of experience.” Strong evidence has emerged from many different lines of research that these “simple and indisputable facts of experience” are contradicted by human behavior. In this article, we summarize some of main contradictions between predictions of utility theory and actual human behavior. Efforts to resolve these contradictions continue to be made within orthodox frameworks, but it appears likely that a paradigm shift is required.
In the lecture we have discussed how supply and demand model fails in real life, this shows that all economic theories are wrong and based on wrong assumptions.
Reading material is attached below. only first section of this article has been discussed.
Failure of Supply and Demand - Links to vast amount of literature on the subject