"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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Even though a perfect price discriminator can extract all of the consumer surplus, how can it be efficient?
What will be an ideal response?
A research firm's findings concluded that the demand for movie tickets is price elastic in the afternoon but inelastic in the evenings. Given this information, to increase overall revenue the theatre owners should
a. Reduce the ticket prices for the afternoon shows and reduce the ticket prices for the evening shows b. Increase the ticket prices for the afternoon shows and reduce the ticket prices for the evening shows c. Reduce the ticket prices for the afternoon shows and increase the ticket prices for the evening shows d. Increase the ticket prices for the afternoon shows and increase the ticket prices for the evening shows
The Paris Bataclan massacre by Al-Qaeda, which struck a French target that was lightly defended, was an example of the "rational terrorist's"
A. compression effect. B. marginalist technique. C. substitution effect. D. diversion technique.
Experimental economics:
A. is not possible given that economists study real-world events. B. is what all economists do when they develop their models. C. creates its own data rather than using data from the real world. D. includes naturally occurring events that approximates a controlled experiment.