Economic Models

question 91

Multiple Choice

Economic models

• A)are people who act out the behavior of firms and households so that economists can study this behavior.
• B)are usually detailed replications of reality.
• C)incorporate simplifying assumptions that often contradict reality,but also help economists better understand reality.
• D)are useful to researchers but not to teachers because economic models omit many details of the real-world economy.

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Definitions:

Indifference

A state where a consumer has no preference between two or more choices.

Utility

An economic term referring to the total satisfaction received from consuming a good or service.

Indifference Curve

A graphical representation showing different combinations of goods or services among which a consumer is indifferent, implying no preference for one combination over another, given their utility or satisfaction remains constant.

Preferred

Refers to something that is more desirable or favored over other options.