ECON 302 - Study Plan ch 1

Sam wants to improve his GPA. to earn a 4.0 this semester. His prior GPA was a 2.75. Imagine that there is an equation that says his new GPA could be calculated based on the number of hours he spends studying, his class attendance, and his prior GPA. Written as an equation, it is Grade = (0.50 x hours spent studying) + (0.25 x class attendance hours) + (0.25 x prior GPA). Sam plans to attend class for 4 out of 4 hours each week. Use the equation to determine approximately how many hours per week Sam needs to study to earn a 4.0.

4.6 hours *Set up as an equation, it looks like 4.0 = .50X + .25(4) + .25(2.75). Then solving for X gives the number of hours Sam should study.

A key feature of some economic models is linearity, or whether the variable of interest changes in constant proportion with another associated variable (meaning they exhibit a linear or constant straight line relationship) or whether the change in the variable is not a constant proportion but varies more or less depending on the level of the associated variable (meaning they have a non-linear or curved line relationship). Which of the following is the most effective way for an economist to support such a relationship?

Conduct behavioral experiments and make quantative observations that indicate the form of the relationship

In order to calculate an economic equation to understand the economic implications, what must one remember to do?

Follow the order of operations

One important use of algebraic modeling of economic behavior is to determine the direction of the relationship between two economic variables—say the quantity of X that is purchased and the price paid for X. If, as the price of X rises, the quantity of purchases fall, the relationship can be said to be ________.

Negative / inverse

When creating a graph for your economics course, which axis is most commonly used to represent price (p)?

Price is most commonly represented on the y-axis.

What can be assumed if an economic model can accurately predict outcomes?

The assumptions of the model are generally accurate.

The relationship between students' head size and students' test scores can best be represented on a graph by

a line with zero slope (no relationship between size of student head and test scores).

If a data line on a graph slopes upward as it goes to the right, it is depicting

a positive relationship between the two variables on the axes. upward sloping line depicts a positive, direct relationship.

Functions are often described as cause and effect in economics. In an economics function, if the variable is on the right-hand side and is doing the explaining, it represents a(n) ________?

cause

In the case of a negative relationship between two variables, all else remaining constant

he value of the two variables will move in opposite directions from each other.

Consider again the total cost curve shown above. Its shape indicates that total costs rise as quantity produced rises at an ________ rate.

increasing

Charlie is researching the relationship between the number of hours he spends on social media and his success in his classes. He sets up an equation to better understand the implications of this relationship. This describes a ________.

mathematical function.

If an economist is trying to predict the impact of a tax cut on economic activity in the U.S., what is/are the best tool(s) for her to use in order to test out her economic model?

mathmatical functions *A cause (tax cut) and effect (economic activity) model is useful in making accurate predictions by using consistent evidence and valid assumptions along with mathematical equations/functions.

The best way to determine the direction and magnitude of the relationship between the price of some good and the demand for it is ________.

mathmatically

The ________ shows the interaction between households and firms in the goods and services market as well as in the labor market. This simplifies a complex economy, enabling economists to better observe and understand behavior.

the circular flow diagram

Suppose you have determined that the quantity demanded of eggs depends on their price and the income of consumers. Prior to quantifying these relationships using a mathematical model you want to be sure of their directional relationships. Which statement is likely to be true?

the sale of eggs fall when the price rises, but they increase when income rises

Which economic model shows price determination through the interaction of buyers and sellers in a market?

the supply & demand framework

What combination of model characteristics are frequently used in the most effective economic models?

useful and simple.