An economist builds a model to explain why factories in a developing country are not adopting a new, highly efficient manufacturing machine. The model simplifies the decision to a single factor: the cost of the new machine versus the money saved from its increased output. The model predicts that all factories should adopt the machine, yet in reality, very few do. Which of the following real-world factors, if true, would best explain why the model's simplification leads to a failed prediction?
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Economics
Ch.2 User-centered design process - User Experience Design - Winter 23 @ UI Design in UI @ University of Michigan - Ann Arbor
UI Design in UI @ University of Michigan - Ann Arbor
UI @ University of Michigan - Ann Arbor
User Experience Design @ UI Design in UI @ University of Michigan - Ann Arbor
University of Michigan - Ann Arbor
Introduction to Microeconomics Course
User Experience Design - Winter 23 @ UI Design in UI @ University of Michigan - Ann Arbor
The Economy 2.0 Microeconomics @ CORE Econ
Introduction to Macroeconomics Course
Ch.1 The supply side of the macroeconomy: Unemployment and real wages - The Economy 2.0 Macroeconomics @ CORE Econ
The Economy 2.0 Macroeconomics @ CORE Econ
Ch.2 Technology and incentives - The Economy 2.0 Microeconomics @ CORE Econ
Ch.3 Doing the best you can: Scarcity, wellbeing, and working hours - The Economy 2.0 Microeconomics @ CORE Econ
Ch.9 Lenders and borrowers and differences in wealth - The Economy 2.0 Microeconomics @ CORE Econ
Analysis in Bloom's Taxonomy
Cognitive Psychology
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A city council wants to understand the primary reason commuters might switch from driving to using a new subway line. They are presented with two economic models to explain this behavior.
- Model A is a complex simulation that includes dozens of variables: real-time traffic data, gas prices, car maintenance costs, weather, road construction, and the psychological stress of driving.
- Model B focuses only on two key variables: the price of a subway ticket versus the average time a commuter saves by not driving.
Which model is likely more effective for explaining the fundamental trade-off influencing the switch to the subway, and why?
An economic model is created to explain why English textile mills in the 19th century rapidly adopted steam-powered looms. The model focuses exclusively on the high cost of wages for skilled weavers compared to the falling cost of coal to power the new machines. A valid criticism of this model is that its exclusion of other factors, such as the cost of building the factory or the price of raw cotton, makes it too unrealistic to be useful.
Robotics Investment Decision
Evaluating a Model for Green Technology Adoption
Evaluating a Model for Green Technology Adoption
Evaluating a Simplified Business Model
An economist is studying technology adoption in different industries. Below are descriptions of simplified models they are considering. Match each model to the primary economic trade-off it is designed to isolate.
An economic model is developed to explain why firms in 18th-century Britain rapidly adopted coal-powered steam engines. The model simplifies the decision by focusing on a single factor: the high cost of labor relative to the low cost of coal. According to the logic of this specific model, in which of the following regions would this same technology be adopted most slowly?
An economist builds a model to explain why factories in a developing country are not adopting a new, highly efficient manufacturing machine. The model simplifies the decision to a single factor: the cost of the new machine versus the money saved from its increased output. The model predicts that all factories should adopt the machine, yet in reality, very few do. Which of the following real-world factors, if true, would best explain why the model's simplification leads to a failed prediction?
Evaluating a Model for Agricultural Technology