Multiple Choice
Which of the following is an example of disaggregating an economic problem using positive and normative analysis?
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0. Basic Principles of Economics
Positive and Normative Analysis
Multiple Choice
Which of the following is NOT a characteristic of a good economic model?
A
It simplifies reality to focus on essential relationships.
B
It makes clear and testable predictions.
C
It is based on unrealistic assumptions that cannot be justified.
D
It is internally consistent and logically coherent.
Verified step by step guidance1
Step 1: Understand what an economic model is — it is a simplified representation of reality designed to explain and predict economic phenomena.
Step 2: Identify the key characteristics of a good economic model: it should simplify reality to focus on essential relationships, make clear and testable predictions, and be internally consistent and logically coherent.
Step 3: Recognize that while economic models often use assumptions, these assumptions should be justifiable and not completely unrealistic to the point where they undermine the model's usefulness.
Step 4: Analyze the given options and determine which one contradicts the idea of a good model — a model based on unrealistic assumptions that cannot be justified is not considered good because it fails to provide reliable insights.
Step 5: Conclude that the characteristic 'It is based on unrealistic assumptions that cannot be justified' is NOT a feature of a good economic model.
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