If an Important Assumption Is Omitted from an Economic Model

question 14

Multiple Choice

If an important assumption is omitted from an economic model,

• A) the model's predictions will be accurate 50% of the time.
• B) the model's predictions will be inaccurate.
• C) the model will not predict anything.
• D) the model will be rejected by other economists.

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Definitions:

Unlimited Liability

A legal obligation in business where owners are personally responsible for all debts of the business, extending to their personal assets.

Limited Liability

A legal structure that protects business owners' personal assets from company debts and liabilities.