Deck 2: Tools of Positive Analysis

Question 1

Normative economics

A)does not depend on market interactions.
B)only looks at the best parts of the economy.
C)examines how the economy actually works (as opposed to how it should work).
D)embodies value judgments.

Answer 1

embodies value judgments.

Question 2

Economists attempt,with moderate success,to perform controlled experiments making policy analysis helpful.

Answer 2

True

Question 3

Unobserved influences on a regression are captured in the

A)error term.
B)parameters.
C)regression line.
D)regression coefficient.

Answer 3

error term.

Question 4

Empirical analysis generally deals with theory and little data.

Question 5

Marginal and average taxes are

A)calculated using the same methodology.
B)not used in modern tax analysis.
C)not calculated using the same methodology.
D)all of the above.

Question 6

The slope of a regression line is calculated by dividing

A)the intercept by the change in horizontal distance.
B)the change in horizontal distance by the change in vertical distance.
C)the change in horizontal distance by the intercept term.
D)the change in vertical distance by the change in horizontal distance.
E)none of the above.

Question 7

If there is a function and one component is Y³,then there is a ____ in the function.

A)square root
B)cubic
C)cosine
D)circle

Question 8

The following can be analyzed using econometrics:

A)labor supply.
B)market demand.
C)tax?setting behavior.
D)poverty.
E)all of the above.

Question 9

When different bundles of commodities give the same level of satisfaction,you are

A)said to be indifferent between the bundles.
B)said to be confused.
C)not able to make a decision.
D)unhappy with any combination.
E)none of the above.

Question 10

The function Y = f(X,Z)means

A)X multiplied by Y equals f.
B)X + Y = Z.
C)Y is a function of both X and Z.
D)none of the above.

Question 11

Panel data requires

A)data on individual entities.
B)time.
C)neither a nor b.
D)both a and b.

Question 12

If there is a function and one component is Y³,then there is a ____ in the function.
The equation containing Y³ would be

A)linear.
B)quadratic.
C)a Nash equilibrium.
D)inefficient.
E)nonlinear.

Question 13

Self?selection bias affects empirical estimation by

A)leading to samples that are not representative of the entire population.
B)making estimators improved.
C)increasing the accuracy of test results.
D)doing none of the above.

Question 14

The Law of Demand states

A)that there is an inverse relationship between price and quantity demanded.
B)that the judicial branch of government sets demand schedules.
C)that laws can have no effect on market economies.
D)none of the above.

Question 15

Positive economics

A)does not depend on market interactions.
B)only looks at the best parts of the economy.
C)examines how the economy actually works (as opposed to how it should work).
D)is very subjective.

Question 16

The marginal rate of substitution is

A)the slope of the utility curve.
B)the slope of the contract curve.
C)the slope of the utility possibilities curve.
D)none of the above.

Question 17

Regression coefficients are indicators of the impact of independent variables on dependent variables.

Question 18

The substitution effect

A)is when individuals consume more of one good and less of another.
B)is associated with changes in relative prices.
C)will have no effect if goods are unrelated.
D)is all of the above.

Question 19

The Latin phrase ceteris paribus means

A)let the buyer beware.
B)other things being the same.
C)swim at your own risk.
D)whatever will be will be.

Question 20

A counterfactual is

A)what happens when there are no facts.
B)what would have happened if the treatment group had not received the treatment.
C)a legal term describing the process of proving that a negative is the actual truth.
D)none of the above.

Question 21

Econometrics is the statistical analysis of economic data.

Question 22

An experimental study is one which individuals are randomly assigned to the treatment and control groups.

Question 23

Primary data sources include information gathered from interviews and experiments.

Question 24

It has been suggested in the text that raising taxes on beer will reduce teen fatalities.Comment on this.

Question 25

A model is a simplified description of some aspect of the economy.

Question 26

Instrumental variables requires that the variable not be correlated with the outcome variable

Question 27

Equilibrium in the market is where supply is equal to demand.

Question 28

Why might the consequences of imposing a tax on harmful fast foods not adhere to theory?

Question 29

Discuss the concept in econometrics that states,"garbage in ...garbage out."

Question 30

Causation and Correlation are generally the same thing.

Question 31

Use the following function for elasticity: = -(1/s)(P/X),where s is the slope of the demand curve,P is the price,and X is the quantity demanded,to find elasticity when demand is X_d= 20-(1/5)P when the price of good X is 30.

Question 32

Suppose that a competitive firm's marginal cost of producing output q is given by MC=2+2q.Assume that the market price of the firm's product is $13.

A)What level of output will the firm produce?
B)What is the firm's producer surplus?

Question 33

It is possible that two different economists can examine the same situation,such as school funding,and reach entirely different conclusions.Why is this so?

Question 34

Imagine that the demand for concert tickets can be characterized by the equation X_d = 14 - P/3.The supply of tickets can be written as X_s = P/4.Find the equilibrium price and quantity of concert tickets.

Question 35

"Since the social sciences are not like the natural sciences,experiments are a waste of time." Comment on the above statement.