Which of the Following Sequences Best Describes the Five Necessary

question 53

Multiple Choice

Which of the following sequences best describes the five necessary steps to develop an economic model in the correct order?

• A)(1): Identify the endogenous variables;(2): identify the exogenous variables;(3): develop a model;(4): compare the model with the data;(5): conduct prediction and policy analysis.
• B)(1): Develop a model;(2): identify the exogenous variables;(3): identify the endogenous variables;(4): compare the model with the data;(5): conduct prediction and policy analysis.
• C)(1): Conduct prediction and policy analysis;(2): develop a model;(3): identify the endogenous variables;(4): identify the exogenous variables;(5): compare the model with the data.
• D)(1): Conduct prediction and policy analysis;(2): compare the model with the data;(3):identify the endogenous variables;(4): identify the exogenous variables;(5): develop a model.
• E)none of the above

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Definitions:

Prisoners' Dilemma

A scenario in game theory that demonstrates why two rational individuals might not cooperate, even if it appears that it is in their best interest to do so.

Repeated Games

A strategic situation in which the same game is played several times by the same participants, allowing for the development of strategies based on past outcomes.

Contestable Markets Model

An economic concept suggesting that a market is competitive if entry and exit costs are low, even if it is dominated by a few firms.

Oligopoly

A market structure characterized by a small number of large firms dominating the industry, leading to limited competition and potential for collaboration in setting prices.