One reason why economists often use models in their analysis is that
A) a model helps us to understand, explain, and predict economic phenomena in the real world.
B) a model accurately pictures every detail of the real world economy.
C) a model relates to individual thought processes rather than behavior.
D) it is relatively easy to perfectly specify a model.

Question

Quizplus · Accepted Answer

Models simplify the real world by abstracting from unnecessary details and allowing economists to focus on essential features that determine economic outcomes. Therefore, models help economists to understand, explain, and predict the behavior of individuals, firms, and institutions in the economy. However, models are not perfect replicas of reality, but rather, simplified representations that may not capture all relevant factors in reality.

One Reason Why Economists Often Use Models in Their Analysis