When Modern Economists Cannot Solve a Model Analytically, They Can

question 42

Multiple Choice

When modern economists cannot solve a model analytically, they can estimate the solution by:

• A) abandoning models altogether.
• B) changing from the inductive back to the deductive approach.
• C) simulating the model with a computer to arrive at a numerical solution.
• D) using induction to solve a series of equations.

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Definitions:

Ending Inventory

The total value of a company's merchandise, raw materials, work-in-progress, and finished goods at the end of an accounting period.

Ceiling Constraint

In accounting, the maximum value that inventory can be reported at, ensuring that assets are not overstated.

Floor Constraint

A limitation in inventory accounting that prevents the value of inventory from being reported below a certain level.

Normal Profit Margin

The average amount by which a company's gross profits exceed its production costs, excluding any extraordinary items or windfalls.