Why Must All Economic Models Involve Simplifications

question 1

Multiple Choice

Why must all economic models involve simplifications?  

• A) because economic models are generally mathematically based 
• B) because human behaviour is very erratic and unpredictable 
• C) because reality is too complex to understand in its entirety, so it must be reduced to a level that can be understood 
• D) because economic models always try to duplicate all possible information and cover all possible variables that might influence decision making

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