The objective of an economic model is to
A) be an accurate description of reality
B) yield better understanding of important relationships
C) use simplifying assumptions to make positive economic statements
D) use basic principles of economics to derive fundamental assumptions about human behavior
E) predict real-world occurrences with complete accuracy

Question

Quizplus · Accepted Answer

Economic models aim to provide a simplified representation of reality that yields a better understanding of important economic relationships. While models do use simplifying assumptions, they are not necessarily expected to be a perfect depiction of reality or to predict real-world occurrences with complete accuracy. However, the fundamental assumptions about human behavior that underlie economic models are intended to be derived from basic principles of economics.

The Objective of an Economic Model Is to