Micro Economics Chapter 2

A model's predictions are referred to as? A) Hypotheses B) Empirical Evidence C) Statistics D) Theories

Answer: A

An experiment refers to? A) A controlled method of investigating causal relationships among variables B) A simplified representation of some real-life phenomenon C) The process of collecting, measuring, and organizing data D) Validating the claims of a model using statistics and facts

Answer: A

Causation occurs when? A) A change in one variable is the reason for a change in another variable B) Two variables tend to move in opposite directions C) Two variables tend to move in the same direction D) A change in one variable does not cause any change in another variable

Answer: A

Refer to the table above. What is the average monthly wage? A) $558 B) $450 C) $612 D) $650

Answer: A

To conduct a randomized experiment, researchers usually classify the participants into a? A) Treatment group and a control group B) Study group and a treatment group C) Treatment group and a test group D) Study group and a control group

Answer: A

Which of the following is a feature of the scientific method? A) The scientific method allows improvisation and correction of inconsistent models B) The scientific method is used only for studying topics related to economics C) The scientific method enables the creation of perfectly accurate models of the real world D) The scientific method is not based on data, statistics, or measurements

Answer: A

Which of the following statements identifies a difference between correlation and causation? A) Correlation implies a mutual relationship between two things, whereas causation occurs when one thing directly affects another. B) Correlation occurs when one thing directly affects another, whereas causation implies a mutual relationship between two things. C) A causal relationship exists between two variables when they are correlated, but correlation does not necessarily exist if thereʹs a causal relationship between two variables. D) Causation cannot arise when correlation is present, and correlation cannot arise when causation is present.

Answer: A

A model refers to? A) A set of facts established by observation and measurement B) A simplified description, or representation, of reality C) Facts, measurements, or statistics that describe the world D) A perfect replica of reality

Answer: B

Data show that in 2012, the college enrollment in Lithasia increased. In the same year, the sale of hot dogs in Lithasia also increased. The relationship between college enrollment and the sale of hot dogs exhibits? A) A negative correlation B) A positive correlation C) A causal relationship D) A zero correlation

Answer: B

In country X, the average yearly salary of 50-year-olds with 16 years of education is $50,275, while the average yearly salary of 50-year-olds with 12 years of education is $36,265. According to these data, 4 additional years of education are likely to be correlated with higher future wages of about? A) 50 percent B) 38 percent C) 24 percent D) 88 percent

Answer: B

Which of the following is an example of a natural experiment? A) A laboratory research on the effectiveness of solar power as an alternative source of fuel B) A research on the effect of air pollution on lung disorders by observing the health conditions of people who stay close to industrial areas and those who stay away from industries C) A study on the benefits of regular exercise by paying for the membership fees at fitness clubs for one-half of the participants D) A research on the effectiveness of a new medicine among some voluntary participants

Answer: B

Which of the following statements is true of models? A) The predictions of a model are referred to as data B) It is more important for a model to be simple and useful than to be precisely accurate C) A model is formulated after developing a hypothesis D) Models are always based on assumptions that are known to be true

Answer: B

A natural experiment is an empirical study? A) In which the predictions of the model are not required to be tested with data. B) In which the researcher assigns subjects to control and treatment groups to verify a cause-effect relationship. C) In which some process, outside the control of the experimenter, has assigned subjects to control and treatment groups in a random or nearly random way. D) That can only be used to understand natural phenomena and is widely used in subjects such as physics and biology.

Answer: C

A variable is a factor that? A) Cannot be measured B) Is independent and cannot be determined C) Takes different values at different points of time D) Is not affected by changes in other factors

Answer: C

An economic model suggests that for every additional year of education, an individual's future wages increase by 5 percent. If Richard, with 12 years of education, earns $20 per hour, how much will he earn per hour if he decides to undertake 4 additional years of education? A) $28.87 per hour B) $26.45 per hour C) $24.31 per hour D) $22.34 per hour

Answer: C

State which set variables have zero correlation between them. A) Consumption and income B) Education and unemployment C) Pollution control measures adopted in Canada and the number of cases of respiratory diseases in Australia D) Availability of health care and death rate

Answer: C

Which of the following is a feature of experiments? A) Experiments are carried out only in the study of economics. B) Experiments are restricted to laboratories. C) Experiments help determine cause and effect between variables. D) Experiments require the division of participants into a treatment group and a test group.

Answer: C

An omitted variable is a variable that? A) Is purposely left out as it does not aid an economic analysis B) Does not cause other variables in a study to change when it changes C) Is removed from a study as it can lead to the problem of reverse causality D) Has been left out, and if included, would explain why the variables considered in a study are

Answer: D

The mean of a data set is the? A) Difference between the highest value and the lowest value B) Sum of all different values multiplied by the number of values C) Product of all values divided by the number of values D) Sum of all different values divided by the number of values

Answer: D

Which of the following statements is true? A) Models help economists explain the past but do not help predict the future B) Models that economists use are perfect replicas of reality C) The scientific method used by economists is based on idealism and not empiricism D) Testing with data enables economists to distinguish between good models and bad models

Answer: D

Which of the following statements is true? A) he subjects in the treatment group and the control group of an experiment are identical in all respects and they are treated identically. B) Randomization allows for classification of participants according to their choice. C) Randomization is not used in medical experiments. D) The subjects in the treatment group and the control group of an experiment are treated identically, except along a single dimension.

Answer: D

The average income of 25 employees working in a firm is $1,754 per month. What is the total income of all the employees? A) $56,225 B) $63,950 C) $40,000 D) $43,850

Answer:D