Exam 19: Building Theories to Explain Everyday Life: From Observations to Questions to Theories to Predictions

Smith and Jones live in virtually identical homes in the same town. Smith sends her children to a private school because the public school in her part of town is a low-ranked school.  Annual tuition per student at the private school is $19,000.  Jones sends her children to the high-ranked public school on her side of town.  Tuition per student per year at the public school is $0.  Most people believe that the private school and the public school in Jones's neighborhood are equivalent when it comes to educating students. According to a theory discussed in the textbook,

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.

Situation 33-1 Suppose that the equation that represents the expected benefits of burglary for a given prospective criminal is as follows: EB = Ps x Loot The criminal's cost equation is as follows: EC = [Pp x (I + F)] +  AC Where: EB is the expected benefits of burglary Ps is the probability of successfully burglarizing a house Loot is the dollar take from the burglary   EC is the expected costs of burglary Pp 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 33-1.  If the prospective criminal sets the following values: Ps = 65 percent Loot = $20,000 Pp = 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.

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

There is no difference between building a theory and evaluating a theory.

It often appears as if there are "too few" workers at the Department of Motor Vehicles (DMV)to service all of its customers at a given point in time.  Based on one of theories discussed in the textbook, this is probably because

There is a direct relationship between the opportunity cost of bad behavior in a public venue and the use of bad behavior in that venue.

Adrian reads about two theories, A and B.  Theory A seems wrong to Adrian and theory B seems correct to Adrian.  It follows that

Which of the following theories is not falsifiable or refutable?

Theory A predicts that the higher the opportunity cost of having a child, the fewer children a woman will have.  Which of the following is evidence against the theory if opportunity cost is measured in terms of foregone salary?

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.)

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

George is a gift giver and Roger is a gift recipient.  George has Roger in his utility function, but Roger does not have George in his utility function.  Roger will likely try to get George to

One theory discussed in the textbook is that there is a direct relationship between the opportunity cost of having children and the number of children a woman will have.

A man moves from a large city to a small town.  In the small town he seems like a very different person than the person he was in the big city.  For instance, he is more polite in the small town than he was in the big city.  This could be because

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?

House A has an ocean view and House B does not.  In all other respects, the two houses are the same.  The market price of house A is $2,800,000; the market price of house B is $2,600,000.  The ocean view is therefore valued at

Which of the following statements is true?

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

The larger a percentage of the population a person is, the ______________ likely that person will have to further engage with people she meets.  This implies that she will generally be ____________ likely to behave unethically and poorly with the people in her town as the population of her town increases.