Answered: Why is it important for us to use…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Why is it important for us to use models when studying economics?

Expert Solution

Step 1

In economics a Model is defined as a theoretical construct which represents the economic processes by using a set of variables and set of quantitative relationship between the variables.

So, a model is a mathematical framework which is usually constructed in order to illustrate a complex situation. So, that the users of these models can understand the situations prevailing in the economy in an effective manner.

Therefore the models are usually designed by the economists as they portrays the situation prevailing in the economy or in the market

Step 2

It important for us to use models when studying economics as

Simplify the reality
Guides our attention to certain topics
They make us to understand the economic concepts in an easy and better manner.
Save our time: as it becomes easy to understand the concept with the help of model
Exact values can be derives with the help of models.

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