Economists develop models to
A) capture every detail of the real world.
B) make their arguments more realistic.
C) justify the assumptions they make about people's behavior.
D) help us understand economic phenomena in the real world.
D
You might also like to view...
Explain how the concept of externalities helps in demarcating the boundaries between the roles of government and private sector in health and health care
What will be an ideal response?
During the expansion phase of the business cycle, households become optimistic about their future earning capacity as do banks. Nominal interest rates rise during expansions. Mortgage lending could be expected to
A) rise if the change in future earnings is thought to be greater than the change in interest rates. B) stay the same. C) fall. D) fall if the change in future earnings is thought to be greater than the change in interest rates.
The indifference curve between expected return and the standard deviation of return for a risk-averse investor
A) is downward-sloping. B) is upward-sloping. C) is horizontal. D) is vertical. E) can take any shape.
A local restaurant offers an "all you can eat" barbeque special. You pay $9.00, and then you can eat as many servings as you desire at no additional cost. It would follow that you will stop eating when
a. your marginal utility (or value) derived from eating another serving is zero. b. your total utility (or value) derived from all of the servings consumed just equals $9.00. c. your marginal utility (or value) derived from another serving equals $9.00. d. it is physically impossible for you to eat any more.