Question

An economic model is:

A. a complete replication of a market or other economic institution that leaves nothing out.

B. a small plastic replication of a bank or stock market.

C. a simplified representation of an economic concept or institution.

D. always based on complex computer simulations.

E. only applied to large complex problems because the small problems are so simple that they don’t need models.

Answer 1

Answer:

The answer is C. a simplified representation of an economic concept or institution.

Explanation:

An economic model is a simplified version of reality that allows us to observe, understand, and make predictions about economic behavior.

Answer 2

Answer:

The correct answer is letter "C": a simplified representation of an economic concept or institution.

Explanation:

Economic models are simplifications of real-world complex phenomena. The main reason why economists tend to create economic models is to have a general understanding of how economic events happen, why they occur, and if there are possible forms of predicting when they could take place. If problematic, those models allow economists to find possible solutions.