Question 1

Economists make assumptions because

Accepted Answer

Economics involves the study of complex systems, and creating models without assumptions would make analysis impossible. Assumptions are necessary simplifications that allow economists to make predictions about how the economy might behave under different circumstances. However, these assumptions may not always hold in reality, which is why economics is often referred to as "the dismal science."

Question 2

Economics is a social science in the sense that it

Accepted Answer

Economics is a social science because it rigorously examines human behavior in relation to economic decisions and choices. While it does rely on statistical analysis, it also utilizes mathematical models and historical data to make predictions and inform decisions. However, economics is just as scientific as physics or any other natural science in terms of its use of quantitative analysis and empirical research.

Question 3

To an economist, theory can be thought of as

Accepted Answer

To an economist, theory is an explanation of the mechanisms behind observed phenomena. It is not just an abstraction or description of a situation, nor is it merely a belief. While there may be different theories or opinions, not all theories are equal in terms of their explanatory power or ability to predict real-world outcomes. Thus, theory is a critical tool for economists to understand and analyze economic phenomena.

Question 4

Which of the following statements is true?

Accepted Answer

Abstraction is the process of simplifying complex real-world phenomena into a model that can be analyzed within economic theory. Therefore, abstraction is an important part of economic analysis. Option A is false as economic theory often makes assumptions that do not hold in the real world. Option B is also false as economists often use simplified models to focus on complex problems, but they should still consider relevant details. Option D is false as the word theory has different meanings for economists and laymen.

Question 5

Tools used by economists include

Accepted Answer

All of the above mentioned tools are used by economists. Historical study is used to understand past economic events and trends which helps in predicting the future. Mathematical reasoning is used to develop economic models and theories. Statistical inference is used to interpret data and draw conclusions about the economy.

Question 6

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

Accepted Answer

The increase in the standard of living since the Industrial Revolution has not meant unlimited abundance for societies or persons. Despite improvements in technology and access to resources, societies and individuals still face constraints such as scarcity and opportunity cost.

Question 7

Economists and others use economic theory

Accepted Answer

Economic theory can provide insights and suggestions for improving public policy, but it is not the only factor considered.

Question 8

Economics

Accepted Answer

Economics is a broad-ranging discipline that studies a wide range of topics related to the production, consumption, and distribution of goods and services, both within the United States and around the world. It also has practical applications in everyday life, such as personal finance, business decision-making, and public policy.

Question 9

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

Accepted Answer

Economists study human behavior, which is affected by an unpredictable and vast range of influences. This unpredictability and influence of human actions makes it difficult to create standardized or predictable theories, which is why economics is often considered a social science rather than a "hard" science like physics.

Question 10

Abstraction can be thought of as

Accepted Answer

Abstraction involves focusing on the essential aspects of a phenomenon or concept, while omitting or simplifying the irrelevant or unimportant details. This helps to understand complex phenomena and build theory. Option A is incorrect because abstraction does not ignore reality, but rather simplifies it to understand it better. Option C is incorrect because abstraction is not about creating absurdity but simplifying reality. Option D is incorrect because abstraction is about simplifying rather than assuming complexity. Option E is incorrect because abstraction helps to analyze cause and effect by simplifying reality.

Question 11

"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

This statement illustrates how economists use idealized assumptions, or abstractions, in order to develop theoretical models and make predictions about real-world economic phenomena. By assuming perfect information, identical tastes, competitive markets, and no government intervention, economists can isolate and analyze particular aspects of the economy in a simplified way that allows them to better understand how different variables interact and affect one another.

Question 12

Probably the most important factor affecting material well-being is

Accepted Answer

Growth in productivity leads to an increase in the economy's output of goods and services, which in turn increases employment opportunities and income levels, ultimately improving material well-being. Inflation rates, unemployment rates, budget deficits, and monopoly power can all have negative impacts on material well-being, but they are not as directly linked to overall economic growth as productivity.

Question 13

Which of the following statements is correct?

Accepted Answer

A hypothesis is an educated guess or prediction that is testable, while a theory is a well-supported and extensively tested explanation for a phenomenon. Therefore, a hypothesis can lead to the formation of a theory if it is confirmed through testing and experimentation. Option A is incorrect because theory and hypothesis have different meanings in science. Option B is incorrect because a theory is already a confirmed and established explanation, so it cannot result from a hypothesis. Option D is incorrect because the use of mathematics is not a defining characteristic of either theory or hypothesis.

Question 14

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 snow consistently falls on Fridays does not mean that Fridays are causing the snowfall. There may be other factors at play, such as weather patterns or atmospheric conditions.

Question 15

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 or opinion, and it is not necessarily a collection of assumptions that simplify the real world. While theories are based on scientific knowledge, not all scientific knowledge has been scientifically verified by the scientific community, so option E is not a comprehensive definition of theory.

Question 16

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 increase in the number of checks processed per hour is a clear indication of an increase in labor productivity.

Question 17

Economic theory

Accepted Answer

The answer of Economic theory
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Question 18

What is the appropriate degree of abstraction?

Accepted Answer

The appropriate degree of abstraction depends on the objective of the analysis. Sometimes, more detail is needed to achieve the objective, while in other cases, minimizing detail may be necessary to avoid complexity. The degree of abstraction should always be selected to best achieve the objective of the analysis.

Question 19

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

Accepted Answer

An introductory course in economics is not meant to turn a student into an economist or provide solutions to most social problems. It also does not necessarily teach how to answer complex social questions. However, it does help the student learn to rationally analyze social problems using economic principles and concepts.

Question 20

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 abstraction.

Quiz 1: What Is Economics?