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8 May, 2015 - 10:14

A model is a simplified structure of the real world which depends on various generalizations and assumptions. Models are used in descriptive economics to formulate principles and in political economics to propose policies.

Usually, a model of an entire country requires that all workers be assumed to be exactly the same. All goods produced are also assumed to be the same, as if only one good were produced. Likewise, all tastes are assumed to be the same.