Which of the following statements about economic models is TRUE?

Question

Quizplus · Accepted Answer

Every economic model is based on a set of assumptions. These assumptions are necessary simplifications of reality, since it is impossible to model all of the complexities of the real world. However, the assumptions should be based on some aspect of reality and should be reasonable and consistent with empirical evidence. This means that economic models are not exact representations of the real world, but rather simplified versions that can help us understand economic phenomena.

Which of the Following Statements About Economic Models Is TRUE