A major reason for the development of new models is
A)because of asymmetric information.
B)that new observations cannot be explained by existing models.
C)that old economic laws are often repealed.
D)that human behavior is no longer important.
E)that new models are always easier to understand.

Question

Quizplus · Accepted Answer

New models are often developed when existing models fail to explain new observations or phenomena. This can happen due to changes in the economic environment or new data becoming available. Asymmetric information may also contribute to the need for new models, but it is not the primary reason. Repeal of old economic laws does not necessarily mean the development of new models, and the statement that human behavior is no longer important is incorrect. Lastly, new models may not always be easier to understand.

A Major Reason for the Development of New Models Is