An economic model is a simplified representation of a complex economic process or phenomenon, which includes only the most essential variables and relationships that are necessary for the purpose of analysis. It is not a normative statement about how the world should be, nor a collection of facts that describe the real world, nor a summary of normative assumptions.

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An Economic Model Is

Question 259

Multiple Choice

An economic model is

A) a statement that describes how the world should be.
B) a collection of facts that describe the real world.
C) a description of some aspect of the economic world that includes only those features of the world that are needed for the purpose at hand.
D) a generalization that summarizes all the normative assumptions we make about a particular issue.

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