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Physical Models in Economics
A less common but illustrative approach to economic modeling involves the use of physical apparatuses. These models are designed to visually represent and explore the interactions and flows within an economy, with Irving Fisher's hydraulic device being a notable historical example.
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Social Science
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Economy
CORE Econ
The Economy 1.0 @ CORE Econ
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
User Experience Design - Winter 23 @ 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
Ch.2 Technology and incentives - The Economy 2.0 Microeconomics @ CORE Econ
The Economy 2.0 Microeconomics @ CORE Econ
Introduction to Microeconomics Course
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Physical Models in Economics
An economist first writes a detailed paragraph describing how a change in the price of a key raw material affects the quantity of a product a company is willing to sell. Next, she creates a line graph illustrating this relationship visually. Finally, she develops an equation that precisely calculates the quantity supplied for any given price of the raw material. What does this process demonstrate about the nature of economic models?
Match each form of economic model representation to its primary characteristic or function.
Choosing the Right Model for Policy Decisions
Modeling Consumer Behavior
For an economic model to be considered a valid and useful tool for analysis, it must be represented using mathematical equations.
Relationship Between Model Forms
An economist is studying the relationship between the price of gasoline and the quantity people are willing to buy. Arrange the following steps in the logical order an economist would typically follow to develop a formal model of this relationship, progressing from a general observation to a precise representation.
When an economist moves from a detailed verbal description of a market relationship to a visual representation that shows the connection between two variables, they are most commonly creating a ______. This visual tool can then be precisely defined using mathematical equations.
An economist develops a verbal model to describe the market for a luxury good. The model states: 'At lower prices, a small increase in price causes a significant number of consumers to stop buying the good. However, at very high prices, the remaining consumers are less sensitive, and the same price increase causes only a small drop in the number of buyers.' Which of the following graphical representations best illustrates this economic model, assuming Price is on the vertical axis and Quantity is on the horizontal axis?
Communicating Economic Findings
Mathematical Representation in Economic Models
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Irving Fisher's Physical Model of the Economy
Evaluating Economic Modeling Approaches
An economist is designing a demonstration for an introductory class to illustrate how the supply of goods, consumer income, and consumer preferences interact to determine market prices. What is the primary advantage of using a physical, mechanical apparatus for this demonstration over a purely mathematical or descriptive one?
An economist builds a physical model to demonstrate the flow of money in a simple economy. The model uses a system of interconnected water tanks and pipes. Match each component of the physical model to the economic concept it most likely represents.
Analysis of a Physical Economic Model
A physical apparatus designed to visually represent the flow of goods and money in an economy is not considered a true economic model because it lacks a mathematical foundation.
Limitations of Physical Economic Models
An economics instructor wants to create a memorable, hands-on demonstration for a group of introductory students to illustrate the dynamic and interconnected nature of a simple economy. For which of the following concepts would a physical apparatus, such as a system of interconnected water tanks and levers, be the most suitable and intuitive teaching tool?
Designing a Physical Economic Model
Interpreting a Physical Economic Model
An economist builds a physical model using a system of interconnected pipes and valves to regulate the flow of colored liquids between several large containers. What fundamental economic principle is this type of apparatus best suited to visually demonstrate?