Economists do not include every minute detail in models because:
a. complicated models are always faulty.
b. as long as the model serves its purpose, it does not need to include every detail.
c. simple models are always better.
d. critical assumptions help to eliminate non-conclusion affecting details.
Answer: b. as long as the model serves its purpose, it does not need to include every detail.
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Refer to Table 9-12. Consider a simple economy that produces only three products: burritos, flashlights, and golf balls. Use the information in the table to calculate the inflation rate for 2016, as measured by the consumer price index
What will be an ideal response?
Which of the following is a possible market solution to the lemons problem?
A) Producers might offer product guarantees and warranties. B) Producers might be required to meet certain legal standards to obtain licenses granting the right to sell their products. C) Government agencies might be charged with directly overseeing production and distribution of certain products. D) Liability laws might be established to ensure that firms selling certain products must face penalties in the event the products function poorly.
When the rate of interest is 10 percent, the present value of $100 payable in two years is approximately
A. $80. B. $110. C. $100. D. $83.
The paramount goal of a firm is to
A) maximize profit. B) maximize sales. C) maximize total revenue. D) minimize costs. E) force its competitors into bankruptcy.