What are the two important properties of all models?
What will be an ideal response?
a) All models are approximations: Models cannot predict how a certain change in a particular variable will affect all individuals in the population. Instead, it predicts what will happen to most people in most circumstances. Thus, any model is just a simpler approximation of the features of a more complex real life phenomenon.
b) Predictions of all models can be tested with data: Data can be used to verify and evaluate the prediction of all models. Testing with data enables economists and other scientists to refute inconsistent models and accept good models.
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Cost-reducing technological advancements allow suppliers to earn more profits but have no noticeable effect on the supply curve
a. True b. False Indicate whether the statement is true or false
Serena Williams should probably not mow her own lawn because
a. her opportunity cost of mowing her lawn is higher than the cost of paying someone to mow it for her. b. she has a comparative advantage in mowing her lawn relative to a landscaping service. c. she has an absolute advantage in mowing her lawn relative to a landscaping service. d. she might sprain her ankle.