A good economic theory:
A)includes every detail that affects the economic behavior of interest.
B)relies on simplifying assumptions in order to explain economic behavior.
C)does not rely on simplifying assumptions.
D)is impossible to achieve because of the difficulty of conducting controlled experiments.
E)is normative and therefore not testable.

Question

Quizplus · Accepted Answer

Economic theories often make simplifying assumptions in order to isolate and explain specific economic behavior or phenomena. While these assumptions may not perfectly align with reality, they can still be useful in helping people understand and analyze economic situations.

A Good Economic Theory