In an economic model, assumptions
A) must be applicable to all real-world situations.
B) must be eliminated before being used to make sure the model is realistic.
C) are not important in determining the usefulness of the model.
D) define the set of circumstances in which the model is most likely to be applicable in the real world.
D
You might also like to view...
A nation should specialize in the good for which it has an absolute advantage
Indicate whether the statement is true or false
Answer the following statement true (T) or false (F)
1) The demand for a resource depends on its productivity and the market value of the product it is producing. 2) If two resources are complementary, a decrease in the price of one will reduce the demand for the other. 3) Other things equal, the less competitive the market in which a firm sells its product, the less elastic will be its resource demand curve. 4) If the substitution effect outweighs the output effect, an increase in the price of a substitute resource will increase the demand for labor.