Question: A simple economic model predicts that a fall in the price of bus tickets means that more people will take the bus. However, you observe

A simple economic model predicts that a fall in the price of bus tickets means that more people will take the bus. However, you observe that some people still do not take the bus even after the price of a ticket fell.
a. Is the model incorrect?
b. How would you test this model?

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a The model is not incorrect Models are only approximations of reallife behavior Even very good mo... View full answer

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