When constructing an economic model, economists
A)rely mostly on their own value judgments and ignore the far more complex world of facts
B)always try to duplicate reality by including all available information
C)use assumptions that are true for the individual but never true for the whole economy
D)must rely on simplifying assumptions that abstract from the complexity of the real world
E)are primarily concerned with making realistic assumptions

Question

Quizplus · Accepted Answer

Economic models are created to simplify the real world and make it easier to understand. Therefore, economists must rely on simplifying assumptions that abstract from the complexity of the real world. This allows them to isolate the important factors that drive economic behavior and make predictions about future outcomes. While these assumptions may not always be true for the whole economy, they can still provide valuable insights into how individual decision-making can impact overall economic outcomes.

When Constructing an Economic Model, Economists