"To be useful, a model must be completely realistic." Evaluate
What will be an ideal response?
This statement is incorrect. To be useful, a model must capture key real-world elements but cannot account for every detail of the real world. The model should capture the essential relationships that enable us to analyze the problem with which we are concerned. A model is useful so long as it sheds light on the central forces at work.
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Pension plans in which employee benefits are set by the plan and the employer contributions are adjusted to meet those benefits is called a
A) defined benefit plan. B) defined contribution plan. C) a fully vested plan. D) an unfunded plan.
Exhibit 6-15 Long-run average cost
?
In Exhibit 6-15, economies of scale exist up to:
A. 500 units of output per week. B. 1,000 units of output per week. C. 1,500 units of output. D. 2,000 units of output.
If an American firm produces goods that are sold to a German household, then
A) German GDP increases but not U.S. GDP. B) U.S. GDP increases. C) the transaction is considered an export in the German GDP accounts. D) net exports in the United States will not change because an export immediately generates an offsetting import.
You want to add a new room on your house, but you are not familiar with the local building contractors and are not sure who to consider for the job
If you ask your friends for referrals, you are using their past experience as a way to evaluate the ________ of the builders. A) efficiency wages B) moral hazard C) asymmetric information D) reputation