AL ECON (20點)

Existence of testable implication enables the theory to be potentially refutable by observations. On the contrary, theory that cannot be potentially refutable by observations tells us nothing about the real world. It is taulogical and is useless in explaining behaviours.
A theory must have observable variables in its test condition and implication, or yield testable implication upon additon of constraints or propositions (such as law of demand), so that the theory's implication can be potentially refutable and can be confirmed by observations. in constrast, theory with unobservable variable in its implication cannot be confirmed by observations. It is tautological and is not useful in explaining behaviours.
A theory can never be proved by evidence. Something being proved means it is always true. However, a theory is useful only if it is potentially refutable and not yet refuted by facts. No one will know if it will be refuted on day by facts, or of ot really explains the underlying reasons behind due to simplying nature of theories. But a proved statement can only be tautological or a logical statement, which gives us nothing useful in explaining the real world.