Scarlett developed an economic model to describe the behavior of consumers according to the good price, and their income and tastes. All else equal, her model predicts that an increase in the price of the good may increase or decrease the number of units purchased. What can be said about Scarlett's model?
A) The model's prediction is ambiguous.
B) The model's prediction is not ambiguous.
C) The model has no assumptions.
D) B and C
Question 2
A good economic model has
A) testable predictions.
B) absence of assumptions.
C) extreme simplifications.
D) ambiguous predictions.
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