Firms do NOT use microeconomic models to A) determine what inputs will be used for production. B) determine whether they should advertise in the newspaper or on the radio. C) strategically raise profits over competitors. D) None of the above. ANSWER D
Date: September 9th, 2020
Which of the following can be analyzed using microeconomic models? A) economic growth B) a country’s international trade pattern C) a firm’s output level decision D) determinants of money supply ANSWER C
Date: September 9th, 2020
Governments may use microeconomic models to study the effects of a new tax on A) the prices consumers pay. B) the money supply. C) the prices charged by producers. D) A and C ANSWER D
Date: September 9th, 2020
Describe in words the anatomy of an economic model. What will be an ideal response? ANSWER An economic model is comprised of a set of assumptions that lead to a set of implications. In an effective economic model, if one or more of the assumptions are changed, so too is the set of implications. […]
Date: September 9th, 2020
Scarlett developed an economic model to describe the behavior of consumers according to the good price, and their income and tastes. All else equal, her model predicts that an increase in the price of the good may increase or decrease the number of units purchased. What can be said about Scarlett’s model? A) The model’s […]
Date: September 9th, 2020
In most microeconomic models, a decision maker A) maximizes an objective subject to a constraint. B) faces no constraints. C) has no clearly defined objective. D) B and C ANSWER A
Date: September 9th, 2020
The maximizing behavior of individuals and firms determines society’s three main allocation decisions: A) which goods are produced, how they are sold, and who gets them. B) which goods are produced, how they are produced, and who finances them. C) which goods are imported, how they are stored, and who gets them. D) which goods […]
Date: September 9th, 2020
Which of the following is an example of a normative statement? A) A higher price for a good causes people to want to buy less of that good. B) A lower price for a good causes people to want to buy more of that good. C) To make the good available to more people, a […]
Date: September 9th, 2020
If an important assumption is omitted from an economic model, A) the model’s predictions will be accurate 50% of the time. B) the model’s predictions will be inaccurate. C) the model will not predict anything. D) the model will be rejected by other economists. ANSWER B
Date: September 9th, 2020
Economic models are most useful in A) predicting changes in one variable due to a change in one or more other variables. B) predicting the direction of the stock market. C) explaining the future with the past. D) generating untestable hypotheses. ANSWER A
Date: September 9th, 2020
