The basic purpose of economic models is to:
A) construct simplifying assumptions about the real world.
B) explain reality in all its complexity.
C) construct situations where controlled experiments can be carried out.
D) provide explanations for, and predictions of the relationship between variables.

Question

Quizplus · Accepted Answer

Economic models are constructed to explain and predict the relationships between variables in the real world. While they may involve simplifying assumptions, the goal is not to fully capture the complexity of reality but rather to provide useful insights and understanding. Controlled experiments are not typically carried out in economics, as the field is largely observational rather than experimental.

The Basic Purpose of Economic Models Is To