Question 1

Suppose people believe that prices will continue to fall in the future, and so they put off buying things now. As a result, prices fall. In economics we refer to this as a(n) :

Accepted Answer

A)   Nash equilibrium.
B)   endowment effect.
C)   self-confirming equilibrium.
D)   precommitment strategy.E) B) and D)
F) A) and B)

Question 2

Which of the following views most likely would belong to a behavioral economist?

Accepted Answer

A)   Governments should never intervene in a housing bubble.
B)   When people spend too much, they are just reflecting their wants.
C)   Change the institutional structure to get people to save more.
D)   More growth is needed to make society better off.E) B) and D)
F) None of the above

Question 3

What distinguishes economists from other scientists?

Accepted Answer

A)   Economists see the world through a lens of incentives; other scientists focus on other aspects of the world.
B)   Economists use models; other scientists build scaled-down replicas of what they are studying.
C)   Economists use regression models; other scientists use only correlations among variables.
D)   Economists focus more on policy issues compared with other scientists.E) C) and D)
F) All of the above

Question 4

Heuristic models are:

Accepted Answer

A)   highly mathematical models that are impossible to solve.
B)   based on scattergrams of two variables.
C)   models expressed informally by graphs.
D)   models expressed informally in words.E) C) and D)
F) A) and D)

Question 5

Until the 1940s economics tended to focus on deductive reasoning. This can be attributed to the:

Accepted Answer

A)   lack of computational power to analyze data.
B)   laissez-faire approach to the economy.
C)   fact that inductive reasoning was viewed as obsolete.
D)   lack of quality economists.E) A) and B)
F) A) and C)

Question 6

A behavioral economist:

Accepted Answer

A)   assumes that people are always irrational.
B)   tends to use heuristic models.
C)   uses models that assume that people are purposeful rather than rational.
D)   uses models that assumes that people are rational rather than purposeful.E) A) and C)
F) All of the above

Question 7

An economist observes that a monopolist does not take full advantage of its market power. She concludes that there must be some rational reason for this behavior that she has not yet discovered. This economist is most likely to be a(n) :

Accepted Answer

A)   traditional economist.
B)   behavioral economist.
C)   irrational economist.
D)   engineering economist.E) A) and B)
F) B) and C)

Question 8

An economist observes that a monopolist does not take full advantage of its market power. She concludes that the firm may not do so because it might not be fair. This economist is most likely to be a(n) :

Accepted Answer

A)   traditional economist.
B)   behavioral economist.
C)   irrational economist.
D)   engineering economist.E) A) and B)
F) All of the above

Question 9

Which of the following would not be part of the empirical approach when studying such questions as "Has abortion led to a decrease in the crime rate?"

Accepted Answer

A)   Looking at the data
B)   Creating informal models and hypotheses
C)   Using deductive reasoning
D)   Using models to structure the empirical studyE) A) and D)
F) A) and C)

Question 10

If you are carrying out purposeful behavior, you are:

Accepted Answer

A)   making completely irrational judgments.
B)   using reflection and making reasoned judgments.
C)   completely rational.
D)   a heuristic individual.E) A) and C)
F) A) and B) B

Question 11

An economist who is most likely to believe that people will never find $200 lying on the street is referred to as:

Accepted Answer

A)   a modern economist.
B)   a mathematical economist.
C)   an engineering economist.
D)   a traditional economist.E) All of the above
F) A) and D)

Question 12

When Williams-Sonoma introduced its first bread baker at $200, sales were low. But when it decided to offer a fancier $300 version, sales of the $200 bread baker rose tremendously. An economist concluded that consumers needed another bread baker for comparison to decide whether the $200 bread baker was a deal. This economist is likely to be a(n) :

Accepted Answer

A)   traditional economist.
B)   behavioral economist.
C)   irrational economist.
D)   engineering economist.E) A) and D)
F) B) and D) B

Question 13

Warren Buffett feared gaining weight. To keep himself from eating too much, he gave unsigned checks for $10,000 to his children, promising to sign them if he exceeded his desired weight by a certain date. This is an example of:

Accepted Answer

A)   an abductive decision.
B)   sunk costs.
C)   an inductive decision.
D)   a precommitment strategy.E) None of the above
F) A) and B) D

Question 14

An economist builds a model by beginning with certain self-evident principles and then derives the implications of that model. What approach is this economist taking?

Accepted Answer

A)   Inductive
B)   Deductive
C)   Apophatic
D)   ExperimentalE) C) and D)
F) A) and B)

Question 15

Traditional economists prefer simpler models because they give clear-cut results that can better highlight certain important insights.

Accepted Answer

A) True 
 B)False

Question 16

The supply and demand model is the workhorse of the principles of economics because it:

Accepted Answer

A)   is a useful model by which students can be introduced to economic reasoning.
B)   is a perfect model and can never be improved upon.
C)   does not have to have any empirical testing to back up the results of the model.
D)   follows directly from the inductive approach to economics.E) A) and D)
F) A) and B)

Question 17

The statistical analysis of economic data is referred to as:

Accepted Answer

A)   microeconomics.
B)   econometrics.
C)   deductive reasoning.
D)   calculus.E) B) and C)
F) A) and B)

Question 18

All economists believe that:

Accepted Answer

A)   people are selfish.
B)   incentives are important.
C)   people follow principles of enlightened self-interest.
D)   assumptions are irrelevant to the outcome of a model.E) A) and D)
F) B) and C)

Question 19

Behavioral economists attempt to take into account predictably irrational behavior.

Accepted Answer

A) True 
 B)False

Question 20

Economists who use supply/demand models:

Accepted Answer

A)   support the free market.
B)   oppose the free market.
C)   could support or oppose the free market.
D)   generally oppose the free market.E) None of the above
F) B) and C)

Exam 21: Thinking Like a Modern Economist

Suppose people believe that prices will continue to fall in the future, and so they put off buying things now. As a result, prices fall. In economics we refer to this as a(n) :

Correct Answer
verified

Which of the following views most likely would belong to a behavioral economist?

Correct Answer
verified

What distinguishes economists from other scientists?

Correct Answer
verified

Heuristic models are:

Correct Answer
verified

Until the 1940s economics tended to focus on deductive reasoning. This can be attributed to the:

Correct Answer
verified

A behavioral economist:

Correct Answer
verified

An economist observes that a monopolist does not take full advantage of its market power. She concludes that there must be some rational reason for this behavior that she has not yet discovered. This economist is most likely to be a(n) :

Correct Answer
verified

An economist observes that a monopolist does not take full advantage of its market power. She concludes that the firm may not do so because it might not be fair. This economist is most likely to be a(n) :

Correct Answer
verified

Which of the following would not be part of the empirical approach when studying such questions as "Has abortion led to a decrease in the crime rate?"

Correct Answer
verified

If you are carrying out purposeful behavior, you are:

Correct Answer
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B

An economist who is most likely to believe that people will never find $200 lying on the street is referred to as:

Correct Answer
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Correct Answer
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B

Warren Buffett feared gaining weight. To keep himself from eating too much, he gave unsigned checks for $10,000 to his children, promising to sign them if he exceeded his desired weight by a certain date. This is an example of:

Correct Answer
verified
D

An economist builds a model by beginning with certain self-evident principles and then derives the implications of that model. What approach is this economist taking?

Correct Answer
verified

Traditional economists prefer simpler models because they give clear-cut results that can better highlight certain important insights.

Correct Answer
verified

The supply and demand model is the workhorse of the principles of economics because it:

Correct Answer
verified

The statistical analysis of economic data is referred to as:

Correct Answer
verified

All economists believe that:

Correct Answer
verified

Behavioral economists attempt to take into account predictably irrational behavior.

Correct Answer
verified

Economists who use supply/demand models:

Correct Answer
verified

Exam 21: Thinking Like a Modern Economist

Suppose people believe that prices will continue to fall in the future, and so they put off buying things now. As a result, prices fall. In economics we refer to this as a(n) :

Correct AnswerverifiedShow Answer

Which of the following views most likely would belong to a behavioral economist?

Correct AnswerverifiedShow Answer

What distinguishes economists from other scientists?

Correct AnswerverifiedShow Answer

Heuristic models are:

Correct AnswerverifiedShow Answer

Until the 1940s economics tended to focus on deductive reasoning. This can be attributed to the:

Correct AnswerverifiedShow Answer

A behavioral economist:

Correct AnswerverifiedShow Answer

An economist observes that a monopolist does not take full advantage of its market power. She concludes that there must be some rational reason for this behavior that she has not yet discovered. This economist is most likely to be a(n) :

Correct AnswerverifiedShow Answer

An economist observes that a monopolist does not take full advantage of its market power. She concludes that the firm may not do so because it might not be fair. This economist is most likely to be a(n) :

Correct AnswerverifiedShow Answer

Which of the following would not be part of the empirical approach when studying such questions as "Has abortion led to a decrease in the crime rate?"

Correct AnswerverifiedShow Answer

If you are carrying out purposeful behavior, you are:

Correct AnswerverifiedB

An economist who is most likely to believe that people will never find $200 lying on the street is referred to as:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedB

Warren Buffett feared gaining weight. To keep himself from eating too much, he gave unsigned checks for $10,000 to his children, promising to sign them if he exceeded his desired weight by a certain date. This is an example of:

Correct AnswerverifiedD

An economist builds a model by beginning with certain self-evident principles and then derives the implications of that model. What approach is this economist taking?

Correct AnswerverifiedShow Answer

Traditional economists prefer simpler models because they give clear-cut results that can better highlight certain important insights.

Correct AnswerverifiedShow Answer

The supply and demand model is the workhorse of the principles of economics because it:

Correct AnswerverifiedShow Answer

The statistical analysis of economic data is referred to as:

Correct AnswerverifiedShow Answer

All economists believe that:

Correct AnswerverifiedShow Answer

Behavioral economists attempt to take into account predictably irrational behavior.

Correct AnswerverifiedShow Answer

Economists who use supply/demand models:

Correct AnswerverifiedShow Answer

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B

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B

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D

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