A model or theory in economics is:

Question

Quizplus · Accepted Answer

A model or theory in economics is built using relevant observations, assumptions, and abstractions. While value judgments may influence the choice of assumptions, the model or theory itself is not based solely on value judgments. The usefulness of a model or theory is not solely dependent on how well it reflects the complexities of the real world, as simplifications and abstractions are sometimes necessary to create a useful model. Normative economic statements are subjective, value-based statements about what ought to be, while models and theories are positive statements about how economic variables interact in the real world.

A Model or Theory in Economics Is