The supply and demand model
A) tries to include as many realistic details as possible in order to provide insights into real-world competitive markets
B) uses simplifying assumptions while still providing insights into real-world competitive markets
C) uses simplifying assumptions that severely limit its usefulness in practice
D) is too complicated to be useful in practice
E) is unable to explain price movements in most real-world competitive markets

Question

Quizplus · Accepted Answer

The supply and demand model uses simplifying assumptions such as ceteris paribus (all else being equal) and perfect competition, but still provides insights into real-world competitive markets. It is a useful tool for understanding how prices are determined and how changes in supply and demand affect market outcomes.

The Supply and Demand Model