When Constructing a Model About How Things Work,it Is Necessary

question 29

Multiple Choice

When constructing a model about how things work,it is necessary that we:

• A)take everything into account.
• B)make assumptions that simplify the processes we are examining.
• C)use mathematics to model things properly.
• D)completely understand all of human history first.
• E)try and create something that will be right 100 percent of the time.

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Definitions:

Marginal Revenue

The additional income that a business receives from selling one more unit of a good or service.

Economic Profits

The difference between total revenues and total costs, including both explicit and implicit costs.

Short-Run Equilibrium

A state in which market supply and demand balance out at current prices, leading to an economic situation where no incentive exists for prices to change.

Allocative Efficiency

A state of resource distribution where it is impossible to make one individual better off without making someone else worse off.