What are the two important properties of all models?
What will be an ideal response?
a) All models are approximations: Models cannot predict how a certain change in a particular variable will affect all individuals in the population. Instead, it predicts what will happen to most people in most circumstances. Thus, any model is just a simpler approximation of the features of a more complex real life phenomenon.
b) Predictions of all models can be tested with data: Data can be used to verify and evaluate the prediction of all models. Testing with data enables economists and other scientists to refute inconsistent models and accept good models.
You might also like to view...
For resources whose property rights are not well-defined or well-enforced,
A) people have an incentive to acquire as much of the resource as possible for themselves before someone else does. B) people have no incentive to acquire the resource since they do not have the property rights to that resource. C) people have little incentive to acquire the resource because if the the property rights are not well-defined or well-enforced, they are most likely of little value. D) people have an incentive to acquire a limited amount of that resource for personal use, but no more than they can use personally.
A nation can produce at a point outside its PPF
A) when it trades with other nations. B) when it produces inefficiently. C) when its PPF is bowed out. D) never.
A tariff hurts
A) the government by decreasing its revenue. B) domestic producers who can't compete with cheaper imports. C) consumers who pay more for the imported good. D) All of the above answers are correct.
The quantity supplied and price tend to vary
a. inversely. b. independently. c. in an unrelated fashion. d. directly.