The Models That Economists Construct

question 35

Multiple Choice

The models that economists construct:

• A)usually make simplifying assumptions.
• B)often rely on physical constructs, such as those used by architects.
• C)rarely use mathematical equations or graphs.
• D)attempt to replicate the real world.

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Definitions:

Novation

The process of replacing one obligation with another by mutual agreement.

Entire Agreement

A clause in a contract that declares the contract to be the complete and final agreement between the parties, superseding all prior negotiations, promises, or representations.

Privity of Contract

The principle that a contract directly affects and grants enforceable rights only to the parties involved in the contract agreement.

Promissory Estoppel

A legal principle that prevents a party from going back on a promise, even if it was made without formal consideration, when someone else has reasonably relied on that promise.