Economic models must
A) be completely realistic to be useful.
B) include all relationships that exist in the relevant issue to be modeled.
C) completely represent the real world.
D) rely on the ceteris paribus assumption.

Question

Quizplus · Accepted Answer

Economic models rely on the ceteris paribus assumption, which means that all other factors except the ones being studied are held constant. It is not possible for economic models to completely represent the real world or include all relationships that exist in the relevant issue. However, by making simplifying assumptions, economic models can still provide valuable insights into complex economic phenomena.

Economic Models Must