Which of the following best illustrates the application of the model-building process to economics?
a. on a sunday morning talk show, two economists with differing political agendas argue about the best way to solve the social security problem on a sunday morning talk show.
b. a labor economist notices that unemployment tends to be higher among teenagers than more experienced workers, develops a model, and gathers data to test the hypotheses in the model.
c. a ph. d. student in economics develops a plausible mathematical model of an industry for his dissertation, but there is no data to test the model.
d. economists come to believe that some economic models are true simply because prominent leading economists say they are true.

The answer is: B) A labor economist notices that unemployment tends to be higher among teenagers than more experienced workers, develops a model, and gathers data to test the hypotheses in the model.

Explanation:

Economic model: simplified description of reality, where hypotheses about economic behavior are tested. Economic models are subjective (they are influenced by the scientist's personal judgement), since there are no objective measures (e.g. the combination of A + B will always be Z) in economic outcomes. Economic models are divided into two broad classifications: theoretical and empirical.

in 2001, dell computer became the world’s largest personal computer vendor, continuing to

gain market share and post profits in an industry struggling with slumping sales and billions of

dollars in losses. dell sells 90% of its pcs directly to the final customer, largely bypassing the

reseller channel that accounts for most of the world’s pc sales. this direct customer relationship

is the key to dell’s business model, and provides distinct advantages over the indirect sales

model. dell’s direct relationship with the customer allows it to tailor its offerings to customer

needs, offer add-on products and services, and use the internet to offer a variety of customer

services. in addition, dell’s pcs are built to customers’ specifications upon receipt of an order,

giving dell additional advantages over indirect pc vendors who must try to forecast demand and

ship products based on those forecasts. dell’s direct sales and build-to-order model has achieved

superior performance in the pc industry in terms of inventory turnover, reduced overhead, cash

conversion, and return on investment (kraemer, et al., 2000).

explanation:

the correct answer is b.)