What is the main task in economic theory when developing an economic model? Question 9Select one:a.To find the equilibrium pointb.To simplify the analytical frameworkc.To determine endogenous variablesd.To complicate the analytical framework

An economic theory:Group of answer choicesMust be expressed mathematically.Should be based on a model that is intended to provide a description of the situation of interest that is as comprehensive as possible.Consists of a model and hypotheses.Can be objectively determined to be the correct theory for the situation it is being used to study.

What are the two types of variables in economic models? (1.5 Marks)Question 10Select one:a.Behavioral and technicalb.Endogenous and exogenousc.Linear and nonlineard.Explanatory and dependent

In an economic model:

1.      In a classical model of a closed economy, assume the equilibrium GDP (Y) is $7000, Consumption C is given by the equation.C = 270 + 0.8 (Y-T).Taxes (T) is equal to $800 and government spending G is $500.What is the equilibrium investment?

An economic systemrequires a grouping of private markets linked to one another.is a particular set of institutional arrangements and a coordinating mechanism used to respond to the economizing problem.requires some sort of centralized authority (such as government) to coordinate economic activity.is a plan or scheme that allows a firm to make money at some other firm's expense.What two conditions must hold for a competitive market to produce efficient outcomes?Demand curves must reflect all costs of production, and supply curves must reflect consumers' full willingness to pay.Supply curves must reflect all costs of production, and demand curves must reflect consumers' full willingness to pay.Firms must minimize production costs, and consumers must minimize total expenditures.Firms must maximize profits, and consumers must all pay prices equal to their maximum willingness to pay.Unlike a private good, a public goodhas no opportunity costs.has benefits available to all, including nonpayers.produces no positive or negative externalities.is characterized by rivalry and excludability.Market failure is said to occur wheneversocial surplus is maximized.competitive markets fail to achieve economic efficiency.society is getting as much benefit as possible from its limited supply of resources.the markets are competitive.If one person's consumption of a good does not preclude another's consumption, the good is said to benonrival (in consumption).rival (in consumption).nonexcludable.excludable.