ECONOMIC MODELS

Economic models are explanations of how the economy or part of the economy works. Economic models take complicated occurrences in the real world, and simplify them.  Economic models are always based on assumed conditions that are simpler than those of the real world. Economic models differ from those in the hard sciences such as physics, because they deal with unpredictable human behaviour. Economic models can be described with text, tables, or graphs. Examples of economic models would be the laws of supply and demand.