When Constructing an Economic Model,economists

question 130

Multiple Choice

When constructing an economic model,economists:

• A)rely mostly on their own value judgments and ignore the far more complex world of facts.
• B)always try to duplicate reality by including all available information.
• C)use assumptions that are true for the individual but never true for the whole economy.
• D)must rely on assumptions for the sake of simplification.
• E)are primarily concerned with making realistic assumptions.

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Definitions:

Corresponding Total Revenue

The total amount of money received by a firm from sales of its products or services, corresponding to a specific level of output.

Individual Incentive Systems

Compensation schemes that reward employees based on their personal productivity, effort, or achievement, aiming to boost individual performance.

Performance

The act of carrying out or accomplishing tasks, duties, or goals as expected or required in a specific role or function.

Subjectively

Based on or influenced by personal feelings, tastes, or opinions rather than external facts or evidence.