Thursday, April 3, 2008

Simple Economic Models

When developing their perspectives on social policies, economists sometimes use models, which range from extremely simplistic to tremendously complex. Some of the most basic economic principles can be illustrated with relatively simple and straightforward models. Introductory economics courses focus on these simple models.

Paper airplane models make extremely simplifying assumptions about the real world to illustrate basic principles that underlie complex phenomena. Economists use models to help understand the complexities of economic issues. Particularly in introductory economics, these models are extremely simplistic and do not resemble the real world. This does not mean we cannot learn basic economic principles from them, however.

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