The Rationale for Using Assumptions in Economics Is

question 25

Multiple Choice

The rationale for using assumptions in economics is:

• A)it avoids having to collect any data
• B)it is a useful way to ensure models are as realistic as possible
• C)because economics is not a science
• D)that it makes the world easier to understand

---

Definitions:

Returns To Scale

The rate at which production output increases as a result of a proportional increase in all inputs (labor, capital, etc.).

Input

The resources, materials, or energy used in the production process to generate output.

Factors Of Production

The inputs used in the creation of goods or services in order to make an economic profit, including land, labor, capital, and entrepreneurship.

Input

Resources used in the production of goods and services.