Chapter 2 Homework

​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 in the price of gas. ​ Debbie's method is a ___________experiment and​ Troy's method is a __________experiment . Group A is the _______group and Group B is the _________ group .

controlled, natural treatment, controlled

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. You say that positive questions ask _______________ and normative questions ask __________ .

what is or what will be what ought to be

Some people choose to got to the dentist quite frequently. You compare the number of cavities for those people relative to those who do not go to the dentist at all. Using the concept of a natural experiment, which of the following statements is true about the scenario? A. This is a decent natural experiment B. This is not a natural experiment C. This is a good natural experiment

B. This is not a natural experiment

Demonstrate causation or correlation with the following​ examples: More ___________and ________ crime rates is likely to be __________ More ___________ and higher ___________ is likely to be __________ .The length of women's skirts and stock market performance is most likely _______.

police officers, lower, causation economic growth, employment levels, causation correlation

In general people with more education earn higher salaries. Economists have offered two explanations of this relationship. The human capital argument says that high schools and colleges teach people valuable​ skills, and employers are willing to pay higher salaries to attract people with those skills. The signaling argument says that college graduates earn more because a college degree is a signal to employers that a job applicant is​ diligent, intelligent, and persevering. The __________ implies that a college student who drops out of school one month before graduation should earn much less than a student who graduates. 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.

signaling argument, human capital argument

The mean and the median are closely related concepts. The median is the numerical value separating the higher half of your data from the lower half. You can find the median by arranging all of the observations from lowest value to highest value and picking the middle value​ (assuming you have an odd number of​ observations). Although the mean and median are closely​ related, the difference between the mean and the median is sometimes of interest. Suppose Country A has five families. Their incomes are $9000, $21,000, $29,000, $39,000, and $50,000. Country A's median income is _______, and its mean income is ______. Suppose country B also has five familities. Their incomes are $9000, 21000, 29000, 39000, and 151000. Country B's median income is _____ and its mean income is ____. Country _____ has a greater income inequality Based on your answers to this​ question, would you expect the ratio of the mean income in the United States to the median income has risen or​ fallen? Explain. A. ​Fallen, because means change less with standard deviation. B. ​Risen, because means change more with extreme values. C. ​Risen, because means increase but medians decrease with income. D. ​Risen, because medians increase with variance but means do not.

29,000; 29600 29000:49800 B B. ​Risen, because means change more with extreme values.

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? A. Economic models are meant to be approximations that predict what happens in most circumstances. B. Economic models are meant to exactly predict each and every outcome by using all variables. C. Even a simplified economic model can provide 99 percent accuracy. D. Even a simplified economic model can provide two standard deviations accuracy. He is still unconvinced 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 _________ .

A. Economic models are meant to be approximations that predict what happens in most circumstances. testing its predictions, empirical data

To say that economists use the scientific method means that they are using​ ___________. A. an ongoing process to develop models of the world and then test and evaluate those models. B. a process to develop models that are intended to exactly represent all the details of a system. C. a method to determine the best course of action for fiscal and monetary policy. D. a method to develop recommendations for policy makers to run economies.

A. an ongoing process to develop models of the world and then test and evaluate those models.

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. Is the model​ incorrect? A. ​No, because it predicts the outcome of increased bus ridership on average. B. ​No, because it is based on an incorrect assumption. C. ​Yes, it's possible that certain​ factors, such as the price of​ gas, were not included in the model. D. ​Yes, because it does not predict the outcome with 100 percent accuracy. How would you test this​ model? A. You should run a natural experiment by analyzing bus ridership and price changes. B. You should randomly question people to see if they prefer taking the bus to other forms of transportation. C. You should determine whether increased bus ridership implies causation or correlation. D. All of the above are appropriate ways to test your model.

A. ​No, because it predicts the outcome of increased bus ridership on average. A. You should run a natural experiment by analyzing bus ridership and price changes.

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? A. ​No, the model is a simplified representation of reality. B. ​Yes, the model includes every result from related academic papers and all industry expertise. C. ​No, since the economic convention is to limit inclusion to the top three variables. D. ​Yes, the model includes all factors.

A. ​No, the model is a simplified representation of reality.

Which of the following examples do you provide as a normative​ question? A. How many people are on food​ stamps? B. How much does welfare drive up the​ deficit? C. Should welfare be​ repealed? D. What is the rate of change of disability​ enrollment?

C. Should welfare be​ repealed?

What is meant by randomization in the context of an economic​ experiment? A. Group numbers are arranged in a nonsequential order. B. Subjects are assigned to control and test groups by noneconomic factors such as race. C. Subjects are assigned by​ chance, rather than by​ choice, to a group. D. Eonomic experiments are not arranged in a logical sequence.

C. 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? A. They publish their model results in academic journals. B. They have their models reviewed by other economists. C. They test their models against​ real-world data. D. They program their models into computers to test via simulation.

C. They test their models against​ real-world data.

Which of the following do you provide as a positive​ question? A. Will our high national debt lead to a breakdown of family​ values? B. Is passing on a high national debt to our children an immoral​ act? C. Who is the most to blame for the national​ debt? D. How much is the national​ debt?

D. How much is the national​ debt?

How does the sample size affect the validity of an empirical​ argument? A. The sample size is not relevant if it is greater than 30. B. The smaller the sample size the better. C. The sample size is not relevant if it is greater than 50. D. The larger the sample size the better.

D. The larger the sample size the better.

As the text​ explains, it can sometimes be very difficult to sort out the direction of causality. Causation occurs when there is​ ____________. A. an ancedotal​ cause-and-effect relationship. B. a​ mythical-known relationship. C. a​ historical-known relationship. D. a logical​ cause-and-effect relationship.

D. a logical​ cause-and-effect relationship.

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​ _____________. A. collect competitor data. B. utilize artificial intelligence to model human behavior. C. develop a model that allows for scenario analysis. D. design and execute an experiment.

D. design and execute an experiment.