The ultimate purpose of an economic model is to
A) explain reality as completely as possible
B) establish assumptions that closely resemble reality
C) help us understand economic behavior
D) determine what each decision maker wants to maximize
E) guide government policy decisions

Question

Quizplus · Accepted Answer

The ultimate purpose of an economic model is to help us understand economic behavior. While economic models are based on assumptions about reality, their primary function is to provide insight into economic decision-making and behavior. They are not necessarily intended to explain reality as completely as possible or to determine what each decision maker wants to maximize. While economic models may guide government policy decisions, this is not their primary purpose.

The Ultimate Purpose of an Economic Model Is to