A Good Economic Model

question 111

Multiple Choice

A good economic model

• A)includes only those features of the world that are needed for the purpose at hand.
• B)includes only features of the world that can be described numerically.
• C)does not include more than two variables.
• D)includes more than two variables but less than 10 variables.
• E)describes all aspects of the economic world.

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Definitions:

Elastic

Describes a situation in economics where the quantity demanded or supplied of a good or service greatly changes in response to changes in price.

Porter's Five Forces

A framework for analyzing a company's competitive environment, including threats from new entrants, bargaining power of suppliers and customers, threats from substitute products or services, and competitive rivalry.

Bargaining Power

The ability of a party to exert influence or control over the terms and conditions of negotiations due to its strengths or advantages.

Substitutes

Alternatives or replacements for someone or something, typically used in the context of materials, products, or personnel.