Exam 1: Reasoning With Economics: Models and Information

A basic model of a business firm in economics assumes that its management cannot improve on the technology that transforms inputs like labor and energy into output.This assumption helps them to understand the choice of:

When a researcher evaluates the probability of an event by looking at how representative the sample is of the population of interest instead of the entire population, he is using:

In order to simplify a complex situation, economic models often treat constraints as unalterable.

Almost all event markets forecast accurately.

Measuring important concepts in economics is difficult and some important economic phenomena are still beyond the understanding of economists.Thus economics is called a(n):

The costs which can be avoided if we alter our decisions or choices are referred to as:

According to the text, college students give higher evaluations to professors who are:

Unlike developed countries, people in under-developed countries usually haggle over the prices of everyday items because:

Since people's incomes are limited and their abilities to borrow differ they face _____ constraints.

How is positive economics different from normative economics?

Utility is a(n) _____ measure of well being of a person.

Which of the following is a root cause behind competition inherent in every society?

What is selection bias? Describe with a few examples.

Decision makers who try their best for rationality but are constrained by limited information and processing abilities are referred to as:

The law which prohibits embezzlement of funds by employees or income tax evasion acts as a(n):

_____ constraints refer to your limited ability to process valuable information.

_____ have the ability to recognize constraints and may choose to incur the costs of altering them.

Assume that an analyst at a leading business daily observes an increase in productivity across industries which announced healthy annual bonus for their employees.This leads him to conclude that productivity is directly related to the incentive scheme followed by companies.The analyst however ignored the increase in capital per worker ratio and other technological developments in these companies which also affected productivity.This error in reasoning is related to:

What do economists mean by rationality?

Carla had received very low annual return from her investment portfolio comprising of stocks of five companies for two years.Her decision to continue holding the same portfolio of assets will be an example of: