Question

For an economist, the idea of making assumptions is regarded generally as a a. bad idea, since doing so leads to the omission of important ideas and variables from economic models. b. bad idea, since doing so invariably leads to data-collection problems. c. good idea, since doing so helps to simplify the complex world and make it easier to understand. d. good idea, since economic analysis without assumptions leads to complicated results that the general public finds hard to understand.

Answer 1

Answer:

c. good idea, since doing so helps to simplify the complex world and make it easier to understand.

Explanation:

Economic reality is extremely complex and includes many variables, so an analysis of reality as it really is considered unfeasible by economists. Therefore, they use simplified models that are able to generate insights for understanding reality. Through these models economists are able to explain the most diverse concepts and demonstrate the mechanisms of operation of the real economy.