Class 5.
Answer the questions
1. What is the purpose of an economic model?
2. How can marginal analysis be used to explain rational behavior?
3. Give an example of a behavioral assumption in an economic model. What is the purpose of using behavioral assumptions in economic models?
4. A person makes decisions by habit. This person considers neither the benefits nor the costs of his or her actions. Can the person be considered rational?
5. In what ways do economic theories and models abstract from reality? Why are unrealistic models useful?
