An economic model is:

A. a complete replication of a market or other economic institution that leaves nothing out.

B. a small plastic replication of a bank or stock market.

C. a simplified representation of an economic concept or institution.

D. always based on complex computer simulations.

E. only applied to large complex problems because the small problems are so simple that they don’t need models.

M. cotteleer electronics supplies microcomputer circuitry to a company that incorporates microprocessors into refrigerators and other home appliances. one of the components has an annual demand of 235 units, and this is constant throughout the year. carrying cost is estimated to be $1.25 per unit per year, and the ordering (setup) cost is $21 per order. a) to minimize cost, how many units should be ordered each time an order is placed? b) how many orders per year are needed with the optimal policy? c) what is the average inventory if costs are minimized? d) suppose that the ordering cost is not $21, and cotteleer has been ordering 125 units each time an order is placed. for this order policy (of q = 125) to be optimal, determine what the ordering cost would have to be.