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.

Question

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.

Quizplus · Accepted Answer

Economic theories rely on simplifying assumptions in order to isolate the important factors affecting economic behavior and make predictions. It is not feasible to include every detail, so simplifications are necessary. However, these simplifications must be justified and relevant to the problem being studied.

A Good Economic Theory