Which of the following statements about models is correct?
a. The more details a model includes, the better the model.
b. Models assume away irrelevant details.
c. Models cannot be used to explain how the economy functions.
d. Models cannot be used to make predictions.
b
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Perfectly competitive firms are price takers because
a. all small firms must take the price set by the largest firm in the market b. firms take the price that government determines is a "fair" price c. each firm is small and goods are perfect substitutes for one another d. free entry and exit in the short run creates a constant market price in the long run e. high barriers to entry force firms to compete by charging lower prices than other firms in the industry
The Smoot-Hawley tariff set off an international trade war in the
A. 1930s. B. 1950s. C. 1970s. D. 1990s.