In an economic model,assumptions

Question

Quizplus · Accepted Answer

Assumptions define the set of circumstances in which the model is likely to be applicable. The assumptions made in an economic model are important in determining the usefulness of the model as they lay the foundation upon which the model is built. A good economic model should be applicable to real-world situations, but not all assumptions made in a model necessarily apply to all real-world situations. Therefore, choice A is not the best answer. Additionally, assumptions are not eliminated before use; rather, they are an integral part of the model. So, choice B is not correct either. Finally, choice C is not true as assumptions are critical in determining the usefulness of the model.

In an Economic Model,assumptions