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Critique of a Market Prediction Model
An economic model is built to predict the number of smartphones a company will sell in a year. The model uses the following factors as fixed inputs: the cost of manufacturing each phone, the size of the company's advertising budget, and the average sale price of a phone. The model then uses these inputs to calculate its single output: the total number of phones sold.
Critically evaluate this model's design, focusing specifically on its treatment of the 'average sale price'. Explain the primary weakness of treating price as a fixed input whose value is determined outside the model, and describe how this weakness could lead to an unrealistic prediction about the number of phones sold.
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Economy
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Introduction to Microeconomics Course
The Economy 2.0 Microeconomics @ CORE Econ
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