Good Economic Models

question 50

Multiple Choice

Good economic models

• A)generate predictions that cannot be tested.
• B)represent every detail of the real world.
• C)yield usable predictions and implications for the real world.
• D)utilize only two factors to analyse the problem under consideration.

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Definitions:

Marginal Cost

The cost of producing an additional unit of a good or service.

Average Total Cost

Represents the per-unit total cost of production, calculated by dividing the total cost by the total quantity produced.

Falling

The process or action of moving downwards, typically used in economics to describe a decrease in prices or values.

Short Run

In economics, the short run refers to a period during which at least one of a firm's inputs cannot be changed, limiting its capacity to adjust to demand changes.