Assumptions characterising an economic model need to be:
A)numerous.
B)implicit.
C)realistic.
D)simple.

Question

Quizplus · Accepted Answer

Economic models need to be simple and make simplifying assumptions in order to be tractable and facilitate analysis. If a model is too complex, it can become difficult to understand and work with. While it is important for assumptions to be realistic, it is also accepted that no model can fully capture the complexity and nuance of the real world. Therefore, assumptions can be implicit rather than numerous, as long as they are transparent to users of the model.

Assumptions Characterising an Economic Model Need to Be