Which of the statements below is/are normative? A) Economists need to include more reality in their models. B) Economists will use a model until it is refuted by someone. C) Microeconomists study economic growth. D) B and C ANSWER A
Date: September 9th, 2020
Billy developed an economic model to describe the behavior of a stock market index. His model predicts that the index increases on Mondays and declines on the other days of the week. What can be said about Billy’s model? A) The model’s predictions are ambiguous and cannot be tested. B) The model’s predictions are not […]
Date: September 9th, 2020
A good economic model has A) testable predictions. B) absence of assumptions. C) extreme simplifications. D) ambiguous predictions. ANSWER A
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
Society faces trade-offs because of A) government regulations. B) profit motive. C) faceless bureaucrats. D) scarcity. ANSWER D
Date: September 9th, 2020
