Exam 32: Building Theories to Explain Everyday Life From Observations to Questions to Theories to Predictions

We state that the evidence __________________ if evidence is consistent with a theory's predictions.

Smith sends her children to a private school on the other side of town. Tuition per student per year is $15,000. Jones sends her children to a public school on her side of town. Tuition per student per year is $0. Most people seem to think that the private school and public school are equivalent when it comes to educating students. According to a theory discussed in the textbook,

For economic imperialists, economics is more of a method of analysis than a specific field of study.

Identify and describe each step of the five-step process outlined in the textbook for building and testing theories.

The higher the cost of talking on a cell phone in public (in terms of being perceived by others as rude) the less likely one is to do so.

Smith drives his car numerous places. Sometimes he drives his car around his residential neighborhood and sometimes he drives it on the highway. Occasionally, Smith gets peeved with the way other people drive and makes a rude gesture to them. Based on one of the theories discussed in the textbook, he is

Which of the following statements is true?

If people value clean air over dirty air, and if the air in city A is cleaner than the air in city B (by a wide margin), then we would expect that ____________________, all else equal between the two cities.

Theories should be judged based upon how consistently and precisely they predict and how well they explain things.

In general, in a given rich country the ______________ the opportunity cost for a woman of having and raising a child, the _____________ children she will have.

Situation 32-1 Suppose that the equation that represents the expected benefits of burglary for a given prospective criminal is as follows: ​ EB = P_s x Loot The criminal's cost equation is as follows: EC = [P_p x (I + F)] + AC Where: EB is the expected benefits of burglary P_s is the probability of successfully burglarizing a house Loot is the dollar take from the burglary EC is the expected costs of burglary P_p is the probability of imprisonment I is the income the criminal gives up if caught and imprisoned F is the dollar value the criminal puts on freedom AC is the anguish cost of committing a burglary ​ ​ -Refer to Situation 32-1. If the prospective criminal sets the following values: ​ P_s = 65 percent Loot = $20,000 P_p = 20 percent I = $30,000 F = $15,000 AC = $5,000 ​ The prospective criminal's expected benefit from committing the burglary is ______________ and his expected cost of committing the burglary is _______________. Economic theory tells us that under these circumstances, the prospective criminal ______________ commit the burglary.

Smith says that criminals are rational and that they consider both the benefits and costs of criminal activity. Jones disagrees. He says criminals are irrational and can't possibly be considering both the benefits and costs of criminal activity. If they did, he argues, they wouldn't be criminals. An economist who wants to figure out if criminals are rational, would most likely build a

"The theory's predictions are consistent with what I believe, so now I have good reason to believe what the theory says." This statement is likely to have been made by a person who believes that

Theories should be judged based upon how

Which of the following statements is false?

Kristie currently spends her $1,000 a week income as follows: $500 on X, $300 on Y, and $200 on Z. Her mother then gives her a $100 bill and tells her to use it to buy more Z. Kristie actually takes the $100 her mother gave to her, adds $40 to the $200 she usually spends on Z, and buys $240 worth of Z. Did Kristie's mother's $100 go to buy only Z?

Scientists are interested in finding out when their theories are wrong, as well as when their theories are right.

The bigger the shortage of a good or service, the ____________ the seller of the good or service will be to an individual customer _________. (We are assuming here that the shortage cannot, for legal reasons, be alleviated through a rise in price.)

The instructors at College A are regularly late for their office hours. Based on a theory presented in the textbook, we would predict that the gap between the ______________student tuition and ___________equilibrium tuition is ___________ at College A.

Suppose that the marginal benefits of giving a gift are greater than the marginal costs of giving a gift. Is the efficient number of gifts being given? If not, what should the gift giver do to move toward the efficient number of gifts being given.