Which of the following statements concerning economic theories is FALSE?
A) A model is a setting within which an economic theory is presented.
B) Any time a hypothetical situation is created in a model or in a theory, the model or theory becomes invalid.
C) Theories are generalized explanations of the relationships between economic variables.
D) Since a graph illustrates a relationship between variables, a graph could portray an economic theory.

Question

Quizplus · Accepted Answer

Statement B is false because creating hypothetical situations in models or theories does not invalidate them. Instead, these hypothetical situations are often used to simplify complex realities and test the implications of theories under controlled conditions.

Which of the Following Statements Concerning Economic Theories Is FALSE