Assumptions define the array of circumstances in which our model is most likely to be applicable.
Answer: Understand the role of assumptions in economic models.
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Some high-end retail stores that distribute mail-order catalogs will prominently offer some very high priced goods for sale (for example, a luxury sports car with gold-plated interior trim) in addition to their regular line of merchandise
Behavioral economists argue that the stores do not really plan to sell these goods, but they use these items to provide the customers with a high reference point for the prices of the other goods in the catalog. This practice is an example of: A) the ultimatim game. B) loss aversion. C) anchoring. D) none of the above
If two firms form a successful cartel, then the output that the two produce in total will
A. be equal to the output in perfect competition. B. be equal to the output of a monopoly market. C. be greater than the output without the cartel. D. be the same as if the market had many firms.
A labor system whereby a limited number of workers can be certified to work in a particular field but are of higher ability because of the training necessary for certification will cause
A. the supply curve for these workers to become horizontal at some point. B. the supply for these workers to increase. C. the demand for these workers to increase. D. the wage paid to these workers to decrease.
When a bank's excess reserves are zero:
a. its required reserves exceed its legal reserves. b. its liabilities exceed its assets. c. its liabilities must be lower than its assets. d. its required reserves equal its legal reserves. e. it cannot meet its reserve requirement.