Microeconomics
11th Edition
ISBN: 9781260507140
Author: David C. Colander
Publisher: McGraw Hill Education
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Question
Chapter 21, Problem 1QE
To determine
Model and changes from reality.
Expert Solution & Answer
Explanation of Solution
Economy is an actual world, which includes the individuals and set of many laws and regulations that determines the relations between the individuals. The testing of any economic theory in the actual world is very difficult because of the wide diversity in the economy. This is handled through the introduction of the economic models.
The economic model is a theoretical construct with a set of variables and set of relationships between the variables. This theoretical construct represents the abstract of the economy. Since the model is only an abstract, it would not show all the characteristics and details of the real economy whereas it highlights the features that are important to the economy.
The best example for the model is the globe. It shows the main highlights about the continents and the design and scalar size of the seas and oceans but is not as perfect representation of the original. Another example includes the roadmaps and model of human organs.
Economics Concept Introduction
Economic model: Economic model is an abstract of the reality, which explains the economy through a set of theoretical construct of set of variables and set of relations between the variables.
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Students have asked these similar questions
1. Imagine a society that produces military goods
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and "butter."
a. Draw a production possibilities frontier for
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b. Show a point that is impossible for the
economy to achieve. Show a point that is
feasible but inefficient.
c. Imagine that the society has two political
parties, called the Hawks (who want a strong
military) and the Doves (who want a smaller
military). Show a point on your production
possibilities frontier that the Hawks might
choose and a point the Doves might choose.
d. Imagine that an aggressive neighboring
country reduces the size of its military. As a
result, both the Hawks and the Doves reduce
their desired production of guns by the same
amount. Which party would get the bigger
"peace dividend," measured by the increase in
butter production? Explain.
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Consider two assets with the following returns:
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Chapter 21 Solutions
Microeconomics
Ch. 21.1 - Prob. 1QCh. 21.1 - Prob. 2QCh. 21.1 - Prob. 3QCh. 21.1 - Prob. 4QCh. 21.1 - Prob. 5QCh. 21.1 - Prob. 6QCh. 21.1 - Prob. 7QCh. 21.1 - Prob. 8QCh. 21.1 - Prob. 9QCh. 21.1 - Prob. 10Q
Ch. 21 - Prob. 1QECh. 21 - Prob. 2QECh. 21 - Prob. 3QECh. 21 - Prob. 4QECh. 21 - Prob. 5QECh. 21 - Prob. 6QECh. 21 - Prob. 7QECh. 21 - Prob. 8QECh. 21 - Prob. 9QECh. 21 - Prob. 10QECh. 21 - Prob. 11QECh. 21 - Prob. 12QECh. 21 - Prob. 13QECh. 21 - Prob. 14QECh. 21 - Prob. 15QECh. 21 - Prob. 16QECh. 21 - Prob. 17QECh. 21 - Prob. 18QECh. 21 - Prob. 19QECh. 21 - Prob. 1QAPCh. 21 - Prob. 2QAPCh. 21 - Prob. 3QAPCh. 21 - Prob. 4QAPCh. 21 - Prob. 5QAPCh. 21 - Prob. 1IPCh. 21 - Prob. 2IPCh. 21 - Prob. 3IPCh. 21 - Prob. 4IPCh. 21 - Prob. 5IPCh. 21 - Prob. 6IP
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