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    Economic Model

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    Jham Tolenada
    Economic models attempt to simplify complex human behavior to provide insights into particular aspects of that behavior, though they inherently ignore some real-world details. There are two broad classes of economic models: theoretical models seek to derive implications of behavior under specific assumptions, while empirical models aim to verify theoretical models' predictions and convert them to precise numerical outcomes.

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    Economic Model

    Uploaded by

    Jham Tolenada
    25 views1 page
    Economic models attempt to simplify complex human behavior to provide insights into particular aspects of that behavior, though they inherently ignore some real-world details. There are two broad classes of economic models: theoretical models seek to derive implications of behavior under specific assumptions, while empirical models aim to verify theoretical models' predictions and convert them to precise numerical outcomes.

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    Economic models attempt to simplify complex human behavior to provide insights into particular aspects of that behavior, though they inherently ignore some real-world details. There are two broad classes of economic models: theoretical models seek to derive implications of behavior under specific assumptions, while empirical models aim to verify theoretical models' predictions and convert them to precise numerical outcomes.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    25 views1 page

    Economic Model

    Uploaded by

    Jham Tolenada
    Economic models attempt to simplify complex human behavior to provide insights into particular aspects of that behavior, though they inherently ignore some real-world details. There are two broad classes of economic models: theoretical models seek to derive implications of behavior under specific assumptions, while empirical models aim to verify theoretical models' predictions and convert them to precise numerical outcomes.

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    eEconomic Model An economic model attempts to abstract from complex human behavior in a way that sheds some insight

    into a particular aspect of that behavior. This process inherently ignores important aspects of real-world behavior, making the modeling process an art as well as a mathematical exercise. (Isang pangekonomiya modelo na isang pinasimple napaglalarawan ng katotohanan)

    There are two broad classes of economic models-1. Theoretical models seek to derive verifiable implications about economic behavior under the assumption that agents maximize specific objectives subject to constraints that are well defined in the model (for example, an agents budget). They provide qualitative answers to specific questionssuch as the implications of asymmetric information (when one side to a transaction knows more than the other) or how best to handle market failures. 2. In contrast, empirical models aim to verify the qualitative predictions of theoretical models and convert these predictions to precise, numerical outcomes. For example, a theoretical model of an agents consumption behavior would generally suggest a positive relationship between expenditure and income. The empirical adaptation of the theoretical model would attempt to assign a numerical value to the average amount expenditure increases when income increases.

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