An economic model
A) uses equations to understand normative economic phenomena.
B) often omits crucial elements.
C) simplifies reality in order to focus on crucial elements.
D) cannot be proven wrong.

Question

Quizplus · Accepted Answer

Economic models simplify reality in order to focus on the most important elements and relationships. This helps to understand complex economic phenomena and make predictions or policy recommendations. However, economic models are not perfect representations of reality and often omit important factors or make assumptions that may limit their accuracy or applicability. Therefore, economic models should be used as tools for analysis, rather than absolute truths that cannot be questioned or tested.

An Economic Model