Exam 2: Economic Theories, Data, and Graphs

An economic theory requires, among other things,

An economic hypothesis will be rejected when

Suppose that a particular theory predicts that on sunny days consumption of ice cream will rise and that on cloudy days consumption of ice cream will fall. If an economist tests this theory and finds that over a six- month period the theory predicts accurately, the economist would likely say

FIGURE 2- 2 -Refer to Figure 2- 2. The slope of curve C is

Suppose we observe that consumption of electricity decreases when the price of electricity rises. We can say that the two variables are related

Suppose we have data for 1000 students for a period of one year. The data show that those students who spend more hours studying have a higher grade point average (GPA). We can say that

When an economist assumes that the owners of firms are motivated only by the desire to maximize profits, the economist most likely believes that

An economist has data showing household income and energy consumption for 10 000 Canadian households. The best way to illustrate these data is

At the minimum or the maximum of the graph of a non- linear function (with x on the horizontal axis and y on the vertical axis) the marginal response of y to a small change in x is

In order to test a theory, one must

When using statistics in economics, the possibility of error

Suppose an economist tells you that, on average, people in Canada have too much personal debt. This is an example of a(n) statement.

For a given year, an index number of average prices (such as the Consumer Price Index) is the ratio of the

The table below shows hypothetical tuition costs at a Canadian university. Year Tuition 2005 \ 5000 2006 \ 5050 2007 \ 5100 2008 \ 5150 2009 \ 5200 TABLE 2- 1 -Refer to Table 2- 1. Assume that 2005 is used as the base year, with the index number = 100. The value of the index number in 2007 is calculated as follows: