Question

An assumption that makes an economic model simpler without affecting its conclusions in important ways is A. an indication of a positive assumption B. an efficient assumption C. useful in disguising the valid conclusions D. a simplifying assumption E. a critical assumption

Answer 1

Answer:

D

Explanation:

A simplifying assumption is a way of making a model simpler without affecting any of its important conclusions. The purpose of a simplifying assumption is to rid a model of extraneous detail so its essential features can stand out more clearly. We might assume that there are only two goods that households can choose from or that there are only two nations in the world. We make

such assumptions not because they are true, but because they make a model easier

to follow and do not change any of the important insights we can get from it.

Answer 2

Answer:

An assumption that makes an economic model simpler without affecting its conclusions in important ways is, D. simplifying assumption.

Explanation:

Every economic model begins with assumptions about the world. There are two types of assumptions in a model: simplifying assumptions and critical assumptions. A simplifying assumption is just what it sounds like—a way of making a model simpler without affecting any of its important conclusions.