Economic models are only useful in analyzing government policy.
A) True, individuals are irrational and therefore economic models are useless.
B) False, economic models can be used to predict individual and firm behavior.
C) True, economists only model those questions for which they are hired.
D) False, economic models are not even useful in analyzing government policy.

Question

Quizplus · Accepted Answer

Economic models can be used to predict both individual and firm behavior, in addition to government policy. While individuals may not make rational decisions all the time, economic models can still provide insight into how they may behave in different situations. Furthermore, economic models are not limited to only analyzing questions for which economists are hired; they can be used to study a wide range of economic phenomena.

Economic Models Are Only Useful in Analyzing Government Policy