Question 1

Abstract representations of reality used by economists to study economic and social phenomena are called
A) fashion models
B) economic models
C) model homes

Accepted Answer

Abstract representations of reality used by economists to study economic and social phenomena are known as economic models. Fashion models and model homes are unrelated to the study of economics.

Question 2

To understand how Sony, Toshiba, and Panasonic use prices to compete in the consumer electronics market, economists might use
A) game theory
B) physics
C) international diplomacy

Accepted Answer

Game theory is a branch of economics that analyzes how players (companies) make decisions in situations where the outcome depends on the decisions of all players. By employing game theory, economists can analyze how Sony, Toshiba, and Panasonic use prices to outdo each other in the consumer electronics market. Game theory helps economists to identify the optimal pricing strategy for each company, given its competitors' strategies.

Question 3

A natural monopoly is a situation that occurs
A) when an exotic plant kills off locals plants
B) in industries where the cheapest way to obtain a given quantity of output is to have only one firm produce it
C) Both answers are correct

Accepted Answer

A natural monopoly is when one firm can produce the good or service at a lower cost than multiple firms would be able to. This is typically due to the high fixed costs required to enter the industry. Therefore, it is most common in industries where economies of scale are significant, making it cheaper for one firm to produce the entire output. This is why the correct answer is B, as it accurately captures the nature of a natural monopoly. A is incorrect as it refers to a different concept unrelated to the economic definition of a natural monopoly. C is incorrect as it only repeats the correct answer without any additional explanation or justification.

Question 4

Should students accept the predictions of economic models?

Accepted Answer

The answer of Should students accept the predictions of economic...

Question 5

Decisions that are typically made at one pont in time are
A) always easy
B) static
C) dynamic

Accepted Answer

Decisions that are made at one point in time are usually based on a specific set of information and circumstances at that moment, making them relatively static. However, the consequences of those decisions may be more dynamic and require future adjustments.

Question 6

When Brenda takes out a mortgage and does not know if her house's price will go up or down, she faces
A) certainty
B) a guaranteed way to get rich
C) uncertainty

Accepted Answer

Since Brenda does not know whether her house's price will go up or down, she is facing uncertainty, which means that the outcome of the situation is unclear or unknown. Therefore, the best choice is C, uncertainty.

Question 7

If producers and consumers are not fully knowledgeable about the characteristics of all products produced and consumed in the economy, the people suffer from
A) incomplete information
B) total ignorance
C) perfect information

Accepted Answer

Incomplete information refers to not having full knowledge or understanding about the characteristics of products produced and consumed in the economy. This can lead to inefficient decision-making and potentially negative outcomes for the consumer. Total ignorance would imply a complete lack of knowledge, which is not necessarily the case in this scenario. Perfect information would mean that both producers and consumers have full knowledge of all products, which is not usually the case in real-world economies.

Question 8

Economic institutions are
A) sets of rules created to govern athletic games
B) a society's conventions that help resolve recurrent economic problems
C) abstract representations of reality that economists use in their studies

Accepted Answer

Economic institutions are conventions or norms developed by society to handle economic problems that arise repeatedly. These institutions may include laws, property rights, the monetary system, and financial markets, among others. They provide stability and predictability to the economy, enabling individuals and businesses to make decisions with confidence. Therefore, option B is the correct answer, while options A and C are incorrect.

Question 9

Why begin the study of market structures with perfect competition?

Accepted Answer

The answer of Why begin the study of market structures...

Question 10

A type of economic model is a(n)
A) mathematical model
B) analogy
C) Both answers are correct

Accepted Answer

Both mathematical models and analogies are types of economic models. Mathematical models use mathematical methods to represent theories and analyze quantitative data, while analogies draw comparisons between similar situations to explain economic concepts.

Question 11

Which of the following is not an institution?
A) the practice of tipping the person who cuts your hair
B) a set of mathematical equations to represent each segment of an economy
C) the set of rules that specifying how your state legislature makes decisions

Accepted Answer

Institutions are systems of established and prevalent social rules that structure social interactions. Choice B, a set of mathematical equations to represent each segment of an economy, is not an institution but rather a model or tool used in economic analysis. Choices A and C describe social practices and legislative rules, respectively, which are considered institutions as they govern behavior and interactions within society.

Question 12

What problems are solved by the institution of a state?

Accepted Answer

The answer of What problems are solved by the institution...

Question 13

An economics classroom has a very happy student. Every compliment from the professor makes this student exquisitely happy. There is also a morose student who rejects every compliment. What economic principle could the professor use to allocate compliments between these two students?

Accepted Answer

The answer of An economics classroom has a very happy...

Question 14

The best measure of how good an economic theory is how
A) elegant its mathematics equations are
B) many people believe it
C) well it explains the real world

Accepted Answer

The best measure of how good an economic theory is how well it explains the real world. Ultimately, an economic theory should be able to accurately describe and predict real-world economic phenomena, not just be aesthetically pleasing or popularly accepted.

Question 15

One concern about using real-world data to estimate key parameters of economic models is that the data is collected by agencies that are
A) political
B) scientific
C) theoretical

Accepted Answer

The data is collected by agencies which may have political biases or motivations, which could potentially skew the accuracy of the data and hence the estimation of key economic parameters.

Question 16

What are the advantages of using analogies as economic models?

Accepted Answer

The answer of What are the advantages of using analogies...

Question 17

If Mark Kimura develops an economic theory, but cannot observe the predicted behavior during lab experiments, he should
A) ignore the results and stick with his idea
B) rethink the validity of the theory
C) keep running the lab experiments and hope for different resutls

Accepted Answer

If Mark Kimura's theory cannot be observed during lab experiments, it suggests that there may be flaws in the theory itself. Therefore, he should reconsider the validity of the theory and refine or adjust it accordingly. Simply ignoring the results or continuing to run the same experiments in the hope of different outcomes may not lead to accurate predictions and could hinder the progress of economic research.

Question 18

In economics, a free ride is
A) enjoying a public good paid for by others
B) jumping the turnstile at the subway
C) enjoying a private good paid for by others

Accepted Answer

A free ride is enjoying a public good paid for by others. It refers to the situation where individuals benefit from the provision of a good or service without paying their fair share of the costs involved. For example, if someone enjoys the beauty of a park without contributing to its upkeep and maintenance, they are taking a free ride.

Question 19

If social agents find all the food they need growing on trees and the only decision that the agents must make is is how much time to spend picking fruit versus relaxing, the agents live in a(n)
A) primitive state of confusion
B) primitive state of nature
C) industrialized state of nature

Accepted Answer

In a primitive state of nature, the agents rely on natural resources for sustenance, which in this case is the food growing on trees. They only have to decide how much time to spend gathering food and how much time to relax, indicating a simple hunter-gatherer lifestyle. An industrialized state of nature would involve more complex decision-making processes as the agents have access to advanced resources and technologies beyond natural resources.

Question 20

Equations that represent each segment of an economy and the interaction of the equations is known as a(n)
A) analogy
B) mathematical model
C) economic institution

Accepted Answer

Equations that represent each segment of an economy and the interaction of the equations is known as a mathematical model.

Quiz 1: Economics and Institutions: a Shift of Emphasis

Abstract representations of reality used by economists to study economic and social phenomena are called

To understand how Sony, Toshiba, and Panasonic use prices to compete in the consumer electronics market, economists might use

A natural monopoly is a situation that occurs

Should students accept the predictions of economic models?

Decisions that are typically made at one pont in time are

When Brenda takes out a mortgage and does not know if her house's price will go up or down, she faces

If producers and consumers are not fully knowledgeable about the characteristics of all products produced and consumed in the economy, the people suffer from

Economic institutions are

Why begin the study of market structures with perfect competition?

A type of economic model is a(n)

Which of the following is not an institution?

What problems are solved by the institution of a state?

An economics classroom has a very happy student. Every compliment from the professor makes this student exquisitely happy. There is also a morose student who rejects every compliment. What economic principle could the professor use to allocate compliments between these two students?

The best measure of how good an economic theory is how

One concern about using real-world data to estimate key parameters of economic models is that the data is collected by agencies that are

What are the advantages of using analogies as economic models?

If Mark Kimura develops an economic theory, but cannot observe the predicted behavior during lab experiments, he should

In economics, a free ride is

If social agents find all the food they need growing on trees and the only decision that the agents must make is is how much time to spend picking fruit versus relaxing, the agents live in a(n)

Equations that represent each segment of an economy and the interaction of the equations is known as a(n)