econ practice
You have been invited to play a 4 hour round of gold that has a value of 60 dollars. The total price to play golf is $35. The net benefit of the round of golf is $___. Now assume that you have a job that pays you $12 per hour. Would you be optimizing to accept the invitation to play golf?
25 , No.
Suppose country A has five families. Their incomes 11,000 , 21,000 , 31,000 , 39,000 , 50,000. Country A's median income is ____ and its mean income is
31,000 30,400
Country B also has five families. Their incomes are11,000 , 21,000 , 31,000 , 39,000 , 149,000. Country B's median income is _____ and its mean income Based on your answers to this questions, would you expect the ratio of the mean income in the US to the median income has risen or fallen? Explain.
31,000 50,200 Risen, because means change more with extreme values.
Suppose that you allocate $20 each week for your entertainment budget. This money is spent on each at Redbox or downloading songs from iTunes at $1 each. Given this information, which of the following would represent your budget constraint for entertainment? Your budget constraint for entertainment illustrates the concept of _________, since as you increase your purchases of one item, you must
Amunt spent on iTunes + Amount spent at Redbox=$20 trade-offs, decrease your purchases of the other item.
Economics differs from these other social sciences because it also addresses
optimization,equilibrium, and empiricism.
How do the sample size affect the validity of an empirical argument?
The larger the sample size the better.
Let's say that you are trying to decide what to do on Friday at 11 a.m. Your make your possible options from the on you value the most to the one that you value the least in the following order: going to class, sleeping in late, go early, getting lunch, going to gym to exercise, and watching television.
The opportunity cost would b sleeping in late, since it was your next-best option.
The definition of economics states that it is the study of how
agents choose to allocate scarce resources and the impact of those choices on society.
Policy decisions made by the government are analyzed
both microeconomics and macroeconomics.
Buyers must place a value on the uses of the product that is ________ the cost of buying the product.
greater than
Which of the following is true regarding the concept of causation?
it describes how one event can bring about change in another.
The costs of making a product must be _______ the final price at which the product sells.
less than
As the test explains, it can sometimes be very difficult to sort out the direction of causality. Causation occurs when there is a
logical cause and effect relationship.
More police officers and ______ crime rates is likely to be a ________.
lower;causation
A policy such as the those limiting a firm's monopoly powers would be studied under ______, since it deals with
microeconomics; part of the overall economy.
Equilibrium describes a situation where
no one would benefit from changing his or behavior.
The statement the United States should legalize same-sex marriage is a normative _____ statement it describes what people ought to do.
normative
The ethical implications of a hotly debated government policy would be best considered a
normative question, since it deals with a subjective issue based on personal preferences.
Optimization describes a situation where
people weigh costs and benefits when making a decision.
Free riding occurs when ________ are out of sync with ________
people's private benefits; the public interest
He is convinced about the reliability of using economic models to make business decisions. You can answer this concern by sharing that you will confirm the accuracy of the model by ______ with _______
testing its predictions; empirical data
The ____ implies that a college student who drops out of school one month before graduation should earn much less than a student who graduates.
signling argument
Microeconomics studies _____, while macroeconomics studies _______
small piece of the overall economy, the economy as a whole
Optimization is the process that describes____
the choices that businesses make.
Optimization in level examines_____ , while optimization in differences analyzes ______
total net benefits; the change in net benefits.
The opportunity cost of an activity is a measure of what __________ when you do that activity.
what is given up
The cause, or the independent variable should be plotted on ____ and the effect, or dependent variable should be plotted on the
x-axis, y- axis
Lower infant mortality is ______ and an improvement in nutrition is _______.
an effect; the cause
To say that economists use the scientific method means that they are using
an ongoing process to develop models of the world and then test and evaluate those models.
In which of the following areas will taking an economics course help benefit you throughout your life?
All of the above
Which of the following is not an example of causation?
Driving without car insurance will lead to getting into an accident.
Oregon expanded its Medicaid coverage in 2008. Roughly 90,000 applied but the state had funds who would receive this free health care insurance from Medicaid. How could you use the Oregon experience to estimate the impact of increased access to health care on health outcomes? Oregon experience is a________ and one might analyze the data as follows: gather and analyze the data on the health outcomes to determine if _______
Natural experiment ; free health care results in better outcomes.
A simple economic model predicts that a fall in the price of bus ticket 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? Is the model incorrect? how would you test this model?
No, because it predicts the outcome of increased bus ridership on average. You should run a natural experiment by analyzing bus ridership and price changes
Suppose that you are on a date with an economics major and you want to impress them by talking about economics. Your date challenges you to state your knowledge of positive and normative questions. Which of the following examples do you provide as normative? Which of the following do you provide as a positive question?
Normative: should welfare be repealed? Positive: How much is the national debt?
What is meant by randomization in the context of an economic experiment?
Subjects are assigned by chance, rather than by choice, to a group.
How do economists distinguish between models that work and those that don't?
They test their models against real-world data.
A surge in cocoa prices is _____ and a pest attack on the cocoa crop is _____
an effect; the cause
Suppose your New Year Resolution is to get back in shape You are considering various ways of doing this: you can sign up for a gym membership, walk to work, take the stairs instead of the elevator, or watch your diet. When making your decision about which activity to choose, you should consider the monetary cost _____ the cost of the activities. The goal is to choose the option that offers the greatest ___ benefit.
as well as; net
Debbie, a member of your team, advocates finding random people and then breaking them up into two groups. Group A would be shown an increase in the price of gas before taking the survey. Group B would be told there was no increase in the price of gas before taking the survey. Troy, another member of your team, recommends finding two groups of people already sorted by whether or not they have recently noticed an increase int he price of gas. Debbie's method is a ________ and Troy's method is a _______. Group A is the _______ and Group B is the _______
controlled experiment, natural experiment treatment group; control group
The length of the women's skirts and stock market performance is likely to be a
correlation
Comparing a set of feasible alternatives and picking the best one is an optimization process called
cost-benefit analysis.
More economic growth and ____ employment levels is likely to be a ______
higher; causation
The ____ implies that a college student who drops out of school one month before graduation should earn almost the same as a student who graduates
human capital argument.
The goal of optimization for an individual is to maximize
overall well-being.
Empircism describes a situation
where economists use data analyze what is happening in the world.
When deciding whether to install visible countdown timers for pedestrians at crosswalks, which be considered in the cost-benefit analysis?
-the cost in terms of dollars of installing these new timers all over the city, -the value of the lives lost by drivers who watch the countdown timers and try to make it through a light - the value of the pedestrians' lives saved by having the timers to assist in crossing the street - the higher maintenance bill associated with fixing these more complex signals when they breakdown.
Which of the following is subject to the free-rider problem?
All of the above
Your client becomes critical of your "sloppy" technique of using a model that does not include all factors. What is the most appropriate reply to this criticism?
Economic models are meant to be approximations that predict what happens in most circumstances.
Suppose you have just been hired as a management consultant by a major oil company to help it optimally price gasoline at its service stations. During a meeting with your client, the CEO asks if your economic models include all factors that impact gasoline prices. What is your response to his question?
No, the model is a simplified representation of reality.
The statement saw the unemployment rate peak at 10 percent in 2009 is a ______ statement since it describes what it's actually do.
Positive
Which of the following is more susceptible to the free-rider problem: fishing in public lakes or public roads?
Use of public roads is more susceptible since even those who don't pay taxes still benefit, while fishing in public lakes can charge for a fishing license, so that everyone goes pays for their share.
Suppose you have been hired as a management consultant by a major oil company to help it optimally price gasoline at its service stations. Your client would like your team to perform a study on customers' gasoline purchasing habits when they notice price increases. You suggest that the team
design and execute an experiment.
The amount produced by sellers must be ________ the amount purchased by buyers.
equal to