When specifying economic models, economists often make assumptions about the real world. The purpose of assumptions in economics is to:
A) make the model more realistic.
B) simplify the model and provide a primary focus for the theory.
C) ensure that the model only covers specific conditions.
D) guarantee the accuracy of the theory.

Question

Quizplus · Accepted Answer

Assumptions in economics are used to simplify complex real-world phenomena, making models more manageable and focusing on key variables and relationships. This helps in understanding, explaining, and predicting economic outcomes without getting bogged down by every possible variable.

When Specifying Economic Models, Economists Often Make Assumptions About the Real