The purpose of making assumptions in economic model building is to
A) force the model to yield the correct answer.
B) minimize the amount of work an economist must do.
C) simplify the model while keeping important details.
D) express the relationship mathematically.
C
You might also like to view...
The figure above shows Clara's demand for CDs. If the price of a CD were to increase from $15 to $25, Clara's total consumer surplus for all the CDs she buys would
A) decrease by $40. B) remain unchanged. C) decrease by $90. D) increase by $80.
For a firm in monopolistic competition, the marginal cost curve intersects the average total cost curve
A) at the minimum average total cost. B) to the left of the minimum average total cost. C) to the right of the minimum average total cost. D) at no point.
Three gas stations are located at different corners of a busy intersection. Kelly manages one of them, and he notices that when he raises his gas prices, the other stations don't follow suit, but that when he cuts his gas prices, his competitors follow. What does demand for Kelly's gas look like, and how should he respond to a change in the wholesale price of gasoline?
If there is no one who is interested in borrowing from a bank:
A. the bank's excess reserves will be zero. B. there will be no process of money creation. C. the required reserve ratio must be equal to zero. D. the required reserve ratio must be equal to 100 percent.