Which of the following is an INCORRECT statement regarding economic models? An economic model is useful if it predicts well, even if its assumptions are not realistic. An economic model is useful even if it predicts with less than100 percent accuracy. An economic model always includes all of the details of the economic world. An economic model is especially useful when dealing with positive economic analysis

Which of the following is an INCORRECT statement regarding economic models? An economic model is useful if it predicts well, even if its assumptions are not realistic. An economic model is useful even if it predicts with less than100 percent accuracy. An economic model always includes all of the details of the economic world. An economic model is especially useful when dealing with positive economic analysis

Macroeconomics

13th Edition

ISBN:9781337617390

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter1: What Economics Is About

Section: Chapter Questions

Problem 20QP

See similar textbooks

Similar questions

Which of the following statements about economic models is correct? a) models are built to mirror exact reality b) models are useful, but they should not be used for the purpose of improving public policies c) models seldom incorporate equations or diagrams d) economic models omit many details, therefore they allow us to see what is truly important
Which of the following is not correct about most economic models? A) They are composed of equations and diagrams. B) They contribute very little to economist's understanding. C) They omit many features of the real world economy. D) In constructing models, economists make assumptions.
All economic models are wrong. Yet, we study models in order to answer economic questions. Explain.
Why must economic theories and models be abstract?
Economic behavior is more complex than assumed by conventional economic theory. Political economy explains the functioning of government. Behavioral economics ties psychology into human behavior. Economists assume that individuals make rational decisions. However real people are more complex. Based on what you have learned in your assigned reading, answer the following questions in your initial post: What are the human behaviors economists should observe when creating economic models? Example: people tend to find solutions that are good enough, but not the best solutions. In your responses, comment on at least two of your peers' posts and share example of how non-rational human behavior can change an economic outcome.
How does Homo Economicus influence economic models? Describe an argument against using Homo Economicus as the basis of economic theory.
Two simplifying assumptions are used extensively in economics. What are they?
Explain the difference(s) between an economic and an econometric model.
What is an economic model?
Local government bans on plastic grocery bags due to environmental concerns have led to increased emergency room visits and deaths related to harmful bacteria such as E. coli, as many people do not wash their bags after each use. Which of the following best characterizes the statement? The statement demonstrates that even when government policies are enacted with good intentions, they do not always guarantee good outcomes due to unintended consequences and secondary effects. The statement demonstrates that normative economics is often confused with positive economics. The statement is an example of the fallacy of composition because all foods do not contain harmful bacteria. The statement shows that all environmental regulations have benefits that exceed the costs.
True/false/explain. Economic models must mirror reality or they are of no value. When economists make normative statements, they are more likely to be acting as scientists.
In what ways do human decision making differ from rational conventional economic theory