An economic model
A)omits critical elements
B)must be presented in mathematical terms
C)simplifies reality in order to focus on its essential elements
D)can never be proven wrong if its assumptions are realistic
E)produces poor predictions if it includes an unrealistic assumption

Question

Quizplus · Accepted Answer

Economic models are constructed to analyze economic phenomena and provide insights into the behavior of economic agents. To achieve this, models simplify reality by focusing on only the essential elements. This allows the model to be more manageable without including every single aspect of the economic environment.

An Economic Model