Econ Chapter 1-7 & 15

A competitive market will:

move towards equilibrium quantity because both producers and consumers act in their own best interest.

How do economists distinguish between models that work and those that​ don't?

they test their models against real world data

Empiricism

using data to test economic models

How does a natural experiment differ from a randomized​ one?

A natural experiment uses existing​ variation, while a randomized experiment generates variation.

How is net present value used to decide whether a project should be undertaken or​ not?

By comparing the upfront cost of a project to the discounted value of the future benefits from the project.

Which of the following is not an important property of an economic​ model?

It predicts actual results over half the time.

Which of the following is not true about economic​ models?

They are not​ useful, since they do not include all variables.

anecdote

1- Arguments by anecdote should be taken seriously 2- Are appropriate when contradicting a blanket statement

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.

1- The ( Signaling argument) implies that a college student who drops out of school one month before graduation should earn much less than a student who graduates. 2- The (Human Capital Argument ) implies that a college student who drops out of school one month before graduation should earn almost the same as a student who graduates.

In valuing future​ rewards, economists often multiply delayed rewards by a positive factor to account for all of the following​ except:

Future rewards are worth more than current rewards

This chapter discussed natural and randomized experiments. Which of the following is not a characteristic of a natural​ experiment?

It is an inferior approach to a randomized method

Which type of experiment is likely to yield more accurate results?

Randomization, because a natural experiment may not be completely randomized

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 is the mean calculated from a series of​ observations?

The mean is the sum values of the observations divided by the number of observations.

Give an example of a pair of variables that have negative correlation

The number of winter coats sold and the temperature outside.

Suppose you come across a study that has discovered a link between reading books and life​ expectancy: People who read more books live longer. Which of the following correlations might exist between reading books and life expectancy even though there is no direct causal link between​ them?

Wealthy individuals who can afford to spend more time reading can also afford better medical care

Causation occurs when there is​ ____________

a logical​ cause-and-effect relationship.

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

This third principle of​ economics, supported by the scientific​ method, is:

empiricism

An argument against​ evidence-based economics would​ be:

its is only an approximation

The competitive equilibrium price equates

quantity supplied to quantity demanded

Holding all else​ constant, if the number of cell phone manufacturers suddenly decreased due to increased​ regulations, then

supply would shift​ leftwards, equilibrium price would​ increase, and equilibrium quantity would decrease.

All of the following statements about means and medians are​ true, except

the median is more skewed by extreme values.

As long as you receive the same​ amount, is a sum of money worth the same today and one year​ later?

​No, if there is a positive interest rate the same amount of money is worth more today than receiving it in the future