For an Economist,the Idea of Making Assumptions Is Regarded Generally

question 28

Multiple Choice

For an economist,the idea of making assumptions is regarded generally as a

• A)bad idea,since doing so leads to the omission of important ideas and variables from economic models.
• B)bad idea,since doing so invariably leads to data-collection problems.
• C)good idea,since doing so helps to simplify the complex world and make it easier to understand.
• D)good idea,since economic analysis without assumptions leads to complicated results that the general public finds hard to understand.

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Definitions:

Loss

This occurs when expenses exceed revenues, or when the selling price of an asset is less than its purchase price, resulting in a negative financial outcome.

Long Position

An investment strategy where an investor buys securities with the expectation that they will increase in value.

Commodity Futures

Financial contracts obligating the buyer to purchase an asset, or the seller to sell an asset, such as a physical commodity or a financial instrument, at a predetermined future date and price.

Price

The amount of money or its equivalent paid or charged for something, often determined by supply and demand.