Question 1

Economics is a social science in the sense that it

Accepted Answer

Economics is a social science because it studies human behavior, specifically how individuals and societies make decisions regarding the allocation of scarce resources. While economics does use mathematical models and statistical analysis, its focus is on understanding and explaining human behavior rather than physical phenomena like physics. Historical data can be used in economics, but it is not the primary source of information.

Question 2

The process of focusing on only the most important factors to explain a phenomenon is called

Accepted Answer

The process of focusing on only the most important factors to explain a phenomenon is known as abstraction.

Question 3

Which of the following statements is true?

Accepted Answer

Abstraction is a crucial element of economic analysis as it allows economists to simplify complex real-world situations into more manageable theoretical models. A is false because economic theory often relies on assumptions that may not fully reflect reality. B is somewhat true, but economists do sometimes focus on simplified models that abstract away from certain details in order to understand broader phenomena. D is also false - the word theory may have different connotations for economists and laypeople.

Question 4

If a voluntary trade takes place,

Accepted Answer

In a voluntary trade, both parties agree to the exchange because they both believe they will benefit. If one party did not believe they would benefit, they would not have agreed to the trade. Therefore, in a successful voluntary trade, both parties will experience some form of benefit.

Question 5

If a government enacts a price floor on agricultural products to protect wheat farmers,the result is likely going to be

Accepted Answer

A price floor set above the equilibrium price causes an increase in price and results in a surplus of the product, in this case, wheat, because the quantity supplied exceeds the quantity demanded at the higher price.

Question 6

A theory can best be defined as

Accepted Answer

A theory is a deliberate simplification of factual relationships that attempts to explain how those relationships work. It is not an untested assertion, a collection of assumptions, an opinion, or a body of knowledge that has been scientifically verified.

Question 7

For the typical student,taking an introductory course in economics should

Accepted Answer

Taking an introductory course in economics can help a student learn to make rational decisions by providing them with a basic understanding of how markets work and how to analyze different economic scenarios. However, it does not necessarily turn them into an economist or provide solutions to all social problems. Teaching a student how to answer complex social questions may be one of the outcomes of an economics course, but it is not the primary objective.

Question 8

Economists make assumptions because

Accepted Answer

Economic analysis involves simplifying complex real-world situations in order to make them meaningful and tractable. Without assumptions, it would be impossible to make sense of economic phenomena or develop coherent economic theories. However, economists must choose their assumptions judiciously, as different assumptions can lead to very different conclusions.

Question 9

In 1971,a bank worker could process 265 checks in 1 hour.Currently,computers with built-in reader-sorter processing capacity have pushed that number above 100,000 checks per hour.Economists describe this type of activity as

Accepted Answer

The increased number of checks processed per hour due to the use of computers and built-in reader-sorters is a clear indication of an increase in labor productivity. This means that with the same amount of labor input, more output is being generated, leading to higher efficiency and economic growth.

Question 10

Tools used by economists include

Accepted Answer

Economists use historical study to understand how economic systems and policies have functioned in the past. They use mathematical reasoning to develop economic models and theories and to analyze economic data. They use statistical inference to make predictions about future economic outcomes and to test the validity of their models and theories. Therefore, all of the options (A), (B), and (C) are correct.

Question 11

Economics

Accepted Answer

Economics is a broad-ranging discipline that studies how society allocates resources to meet people's needs and wants. It covers topics such as international trade, finance, taxation, labor markets, environmental issues, and more. While it uses mathematical and statistical methods to analyze economic phenomena, economics also deals with real-world problems that affect people's everyday lives.

Question 12

The dramatic increase in the standard of living since the Industrial Revolution

Accepted Answer

Despite the increase in standard of living since the Industrial Revolution, there are still constraints and limitations to societies and individuals. Unlimited abundance is not a reality and opportunity cost remains a relevant concept. Therefore, option B is the best choice.

Question 13

Which of the following statements is correct?

Accepted Answer

A hypothesis is an initial explanation or prediction that is tested through observation and experimentation. A theory, on the other hand, is a well-supported explanation that has been tested and confirmed through many different lines of evidence. Therefore, a hypothesis may lead to the development of a theory if it is tested and confirmed.

Question 14

Economics is a social science rather than a "hard" science like physics because

Accepted Answer

Economics deals with the highly unpredictable and diverse behavior of human beings, which cannot be effectively measured or modeled using the same techniques that are used in physics, chemistry, or other hard sciences. While economic theories may be backed up by statistical models or mathematical formulas, these cannot capture the full scope and variability of human behavior in economic interactions. Therefore, economics is considered a social science, rather than a hard science.

Question 15

Abstraction can be thought of as

Accepted Answer

Abstraction involves distilling complex phenomena by omitting unimportant details and focusing on essential characteristics in order to better understand them. It does not entail ignoring reality, assuming unnecessary complexity, creating absurdity or stylizing reality.

Question 16

Probably the most important factor affecting material well-being is

Accepted Answer

Growth in productivity directly contributes to an increase in material well-being as it leads to an increase in goods and services produced, which translates to an increase in income and standard of living for individuals. Inflation rates, unemployment rates, and budget deficits can have negative impacts on material well-being, but they are not the most important factor. Monopoly power can also have negative impacts but is not as prevalent as productivity growth in affecting material well-being.

Question 17

During one winter quarter at Frozen U.,snow falls every Friday night.Students assume that,on their campus,Fridays cause snow.This hypothesis

Accepted Answer

The assumption that Fridays cause snow is an example of the fallacy of assuming that correlation implies causation. Just because two events are correlated (i.e. snow falls on Fridays), it does not necessarily mean that one caused the other. In this case, there may be other factors (such as temperature or air pressure) that cause both events to occur on the same day.

Question 18

What is the appropriate degree of abstraction?

Accepted Answer

The appropriate degree of abstraction depends on the objective of the analysis. In some cases, a high level of detail may be necessary while in others, a more abstract approach may be sufficient. It is important to consider the purpose of the analysis and the audience that it is intended for when determining the appropriate level of abstraction.

Question 19

To an economist,theory can be thought of as

Accepted Answer

Theory in economics is an explanation of the mechanisms behind observed phenomena. It is based on logical reasoning and is subject to empirical verification. It is not just an abstraction for the sake of argument, nor is it just one person's opinion. It goes beyond mere description of a situation and is based on beliefs that can be verified through empirical evidence.

Question 20

"Assume that all individuals have perfect information about prices now and in the future,that they have identical tastes,that all markets are competitive,and that there is no government." This statement is indicative of how economists

Accepted Answer

The statement indicates that economists are using idealized assumptions to develop theory and abstracting for analytic purposes.

Quiz 1: What Is Economics