Economists use assumptions in order to
A. make models more realistic.
B. simplify complex real-world behavior.
C. make their models fit the data.
D. avoid using mathematics.
B. simplify complex real-world behavior.
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"Demand curves slope down, so the demand curve faced by a perfectly competitive firm must also be downward sloping." Do you agree or disagree? Why?
What will be an ideal response?
Assume a competitive market has firms earning large economic profits. What is expected to happen over time in this competitive market and to firm's profits?
What will be an ideal response?
Suppose you are the manager of Big Boards, a firm that produces particle board. To make your particle board, you purchase sawdust from timber farms. During the process of harvesting timber, both lumber and sawdust are produced. If the demand for lumber decreases, this will cause the production of sawdust to ________ and the price of sawdust to ________.
A) decrease; fall B) increase; fall C) increase; rise D) decrease; rise
law of comparative advantage
What will be an ideal response?