Explain how a model can be useful even if it is not realistic
What will be an ideal response?
Models are used to simplify reality to expose only those aspects of behavior that are important to the question being asked. Thus, while not realistic, the model gets at the heart of the matter and allows us to ignore irrelevant details.
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A minimum wage that is set above a market's equilibrium wage will result in
a. an excess demand for labor, that is, unemployment. b. an excess demand for labor, that is, a shortage of workers. c. an excess supply of labor, that is, unemployment. d. an excess supply of labor, that is, a shortage of workers.
From the viewpoint of the entire economy, the cost of government is
a. equal to the amount of taxes collected. b. greater than the amount of taxes collected. c. less than the amount of taxes collected. d. equal to the level of government expenditures.