Exam 1: The Scope and Method of Economics

Explain what is meant by the term ceteris paribus. Why is this concept often used in economic models?

Suppose that as wages increase the quantity of labor supplied increases as well. However, assume that at some point as indicated in the table below increases in wages actually lead to a reduction in the quantity of labor supplied. Graph this relationship with the quantity of labor on the horizontal axis and the wage rate on the vertical axis.

What branch of economics involves the collection and use of data to test economic theories? Why is this task often more difficult in economics than it is in physical sciences?

The following table shows how the unit costs of producing cotton rugs varies with daily output for a given factory: Plot the points and trace a curve through them. Describe the relationship between cost per rug and the number of rugs produced daily.

Evaluate the following statement - "Economists are fond of saying that there are positive statements and normative ones but the truth is that all questions are really normative".