Question 1

Refer to Situation 33-1.If the prospective criminal sets the following values: Ps = 75 percent
Loot = $50,000
Pp = 20 percent
I = $80,000
F = $35,000
AC = $5,000
The prospective criminal's expected benefit from committing the burglary is ______________ and his expected cost of committing the burglary is _______________.Economic theory tells us that under these circumstances,the prospective criminal ______________ commit the burglary.
A) $37,500;$28,000;will not
B) $37,500;$28,000;will
C) $6,667;$14,000;will not
D) $57,500;$120,000;will

Accepted Answer

Expected benefit = (Ps x Loot) = (0.75 x $50,000) = $37,500

Expected cost = (Pp x I) + F + AC = (0.20 x $80,000) + $35,000 + $5,000 = $28,000

Expected benefit ($37,500) is greater than expected cost ($28,000), so the prospective criminal will commit the burglary.

Question 2

Refer to Situation 33-1.If the prospective criminal sets the following values: Ps = 60 percent
Loot = $10,000
Pp = 10 percent
I = $20,000
F = $25,000
AC = $10,000
The prospective criminal's expected benefit from committing the burglary is ______________ and his expected cost of committing the burglary is _______________.Economic theory tells us that under these circumstances,the prospective criminal ______________ commit the burglary.
A) $6,000;$14,500;will not
B) $6,000;$14,500;will
C) $6,667;$6,000;will
D) $17,500;$12,000;will

Accepted Answer

A

Question 3

Which of the following can a homebuyer pay for indirectly when purchasing a home?
A) good weather
B) a good school district
C) a nice view
D) all of the above

Accepted Answer

Homebuyers indirectly pay for desirable features such as good weather, a good school district, and a nice view through higher property values and prices in areas where these features are present.

Question 4

In general,in a given rich country the ______________ the opportunity cost for a woman of having and raising a child,the _____________ children she will have.
A) higher;fewer
B) higher;more
C) lower;fewer
D) lower;more
E) a and d

Accepted Answer

The opportunity cost refers to what is foregone by choosing one option over another. In this context, if the opportunity cost for a woman of having and raising a child is higher (due to factors like career opportunities, education, etc.), she is likely to have fewer children. Conversely, if the opportunity cost is lower, she might opt to have more children. Therefore, both A and D are correct, making E the correct choice.

Question 5

Theories should be judged based upon how
A) well they explain things.
B) consistently and accurately they predict.
C) famous the economist is making the prediction.
D) the amount of attention given to them by the media.
E) a and b

Accepted Answer

Theories should be judged based upon how well they explain things and how consistently and accurately they predict. Celebrity status or media attention should not be factors in evaluating the validity of a theory.

Question 6

A person tends to be ______________ likely to lose her temper with a boss than with a friend because the opportunity cost of losing her temper with her boss tends to be _____________ than the opportunity cost of losing her temper with her friend.
A) less;higher
B) more;higher
C) less;lower
D) more;lower

Accepted Answer

A person tends to be less likely to lose her temper with a boss than with a friend because the opportunity cost of losing her temper with her boss tends to be higher than the opportunity cost of losing her temper with her friend. This is because losing one's temper with a boss can have negative consequences such as getting fired or receiving a bad performance review, whereas losing one's temper with a friend may only result in a temporary strain on the relationship.

Question 7

The efficient number of gifts that a gift-giver wants to give is the number at which the marginal benefits of giving a gift are__________________the marginal costs of giving a gift.
A) greater than
B) less than
C) equal to
D) less than or equal to

Accepted Answer

The efficient number of gifts is when the marginal benefit equals the marginal cost. If the marginal benefits are greater than the marginal costs, it is efficient to give additional gifts. If the marginal costs are greater than the marginal benefits, it is efficient to give fewer gifts. However, if the marginal benefits are equal to the marginal costs, it means that the gift-giver is getting the maximum overall benefit from their gift-giving, which is the efficient number of gifts.

Question 8

House A has an ocean view and House B does not.In all other respects,the two houses are the same.The market price of house A is $2,300,000;the market price of house B is $1,600,000.The ocean view is valued at
A) $700,000.
B) $1,950,000.
C) -$700,000.
D) $600,000.

Accepted Answer

The difference in market price of the two houses is solely due to the presence or absence of an ocean view. The difference between the market prices of the two houses is $2,300,000 - $1,600,000 = $700,000. Therefore, the ocean view is valued at $700,000.

Question 9

Anna gives Billy a gift of $200.We can be sure that Billy will
A) spend the $200 on what Anna hopes that he will spend it on.
B) save the $200,and not spend it on anything.
C) spend the $200 on whatever is next on Billy's list of things to buy.
D) spend the $200 on something that Anna does not want him to spend it on.

Accepted Answer

We cannot be sure that Billy will spend the $200 on what Anna hopes, as we do not know what she wants him to spend it on. It is also unlikely that he will save the entire amount, as most people have immediate needs or wants. However, it is reasonable to assume that he will spend it on the next thing on his list of things to buy, as many individuals have ongoing expenses and desires. There is also no information to suggest that Anna has any specific objection to how Billy chooses to spend the money, so it is unlikely that he will spend it in a way she would disapprove of (choice D).

Question 10

George is a gift giver and Roger is a gift recipient.George has Roger in his utility function,but Roger does not have George in his utility function.Roger may try to get George to __________________ George's efficient number of gifts to (give).
A) give more gifts to him than
B) reduce the number of gifts he receives below
C) increase the number of gifts he receives beyond
D) a and b
E) a and c

Accepted Answer

Since George has Roger in his utility function but Roger does not reciprocate, Roger may try to manipulate the situation to either get George to give more gifts than George's efficient number or to increase the number of gifts he receives beyond George's efficient number. Both options aim at benefiting Roger, exploiting the fact that George values Roger's happiness.

Question 11

Those who say that economics is becoming an increasingly imperialist social science are suggesting that economics is
A) becoming increasingly concerned with corporations rather than small businesses.
B) becoming increasingly focused on government actions rather than on business activity.
C) spreading out into other fields of study,such as history,anthropology,and sociology.
D) becoming increasingly focused on business activity rather than on government actions.

Accepted Answer

The term "imperialist" suggests that economics is expanding into other fields of study, such as history, anthropology, and sociology, which is consistent with choice C.

Question 12

In general,a dry cleaner in a small town is ______________ likely to be unethical in his business practices than a dry cleaner in a large city.This is because the larger a percentage of the population a person is,the _____________likely that person will have to further engage with people he initially meets.
A) more;less
B) less;less
C) more;more
D) less;more

Accepted Answer

The answer of In general,a dry cleaner in a small...

Question 13

The _________________ the opportunity cost of bad behavior,the _________________ likely one is to exhibit bad behavior.
A) higher;less
B) lower;more
C) higher;more
D) lower;less
E) a and b

Accepted Answer

The correct answers are A) higher; less and B) lower; more. This is because opportunity cost refers to the benefits one foregoes by choosing one alternative over another. Thus, if the opportunity cost of bad behavior is high, individuals are less likely to engage in it because they are giving up more valuable alternatives. Conversely, if the opportunity cost is low, individuals are more likely to exhibit bad behavior since they are not forgoing significant benefits.

Question 14

Which of the following is false?
A) A theory should be judged based upon whether or not it tells us the things we want to hear.
B) Scientists are interested in finding out when their theories are wrong or right.
C) Scientists are interested in building theories that can be refuted.
D) If evidence is consistent with a theory's predictions,we state that the evidence fails to reject the theory.

Accepted Answer

A theory should not be judged based upon whether or not it tells us the things we want to hear. A theory should be judged based upon its ability to explain and predict observations and experimental results. Theories that make accurate predictions are more likely to be accepted by the scientific community.

Question 15

We state that the evidence __________________ if evidence is consistent with a theory's predictions.
A) fails to reject the theory
B) proves the theory is correct
C) proves the theory is invalid
D) none of the above

Accepted Answer

The evidence does not necessarily prove that the theory is correct (B) or invalid (C), but rather supports it by being consistent with its predictions, meaning we cannot reject the theory. Therefore, choice A is the most accurate answer.

Question 16

The larger a percentage of the population a person is,the ______________ likely that person will have to further engage with people she meets.This implies that she will generally be ____________ likely to behave unethically and poorly with the people in her town as the population of her town increases.
A) more;less
B) less;less
C) more;more
D) less;more

Accepted Answer

When a person is part of a larger percentage of the population, it means there are more people around them, so they are more likely to meet and interact with new people. This implies that they will generally be more likely to behave unethically and poorly with the people in their town as the population of their town increases. Therefore, the larger the percentage of the population, the more likely they are to engage with people and behave poorly, making the best choice (C) more likely, not less likely.

Question 17

Which of the following is true?
A) The motivation to try to explain something is at the heart of building a theory.
B) If a theory makes people uncomfortable then it should be discarded or ignored.
C) In order for a theory to be valid it must be a perfect description of reality.
D) Building a theory and evaluating a theory are the same thing.

Accepted Answer

The motivation to explain something is the driving force behind creating a theory. It is important to try to explain phenomena in order to understand it better and make predictions about it.

Option B is incorrect because discomfort with a theory does not necessarily mean it should be discarded or ignored. It may be uncomfortable or challenging because it challenges traditional beliefs or ways of thinking.

Option C is incorrect because it is impossible for a theory to be a perfect description of reality. Theories are always subject to revision and refinement as new information is discovered.

Option D is incorrect because building a theory involves formulating ideas and hypotheses while evaluating a theory involves testing those ideas and hypotheses against evidence.

Question 18

Which of the following theories is not falsifiable or refutable?
A) Everything that has happened to Jane throughout her life happened to her specifically because she was born on June 23,1993.
B) People with blue eyes tend to be more sensitive to light than people with brown eyes.
C) Women who are electrical engineers tend to have fewer children than women who are retail cashiers.
D) People who watch more than six hours of television per day tend to weigh more than people who watch fewer hours of television daily.
E) all of the above

Accepted Answer

The theory mentioned in option A is not falsifiable or refutable as there is no way to test or verify it. It is based on an arbitrary assumption without any scientific evidence or explanation. The other options can be tested and refuted by conducting experiments or collecting data.

Question 19

To an economist,it is preferable to
A) assume that all criminals are rational.
B) assume that all criminals are irrational.
C) build a theory based on a rational criminal and then check the evidence.
D) a or b

Accepted Answer

Building a theory based on a rational criminal and then checking the evidence is preferable because it allows for a more realistic and accurate analysis of criminal behavior. Assuming all criminals are either rational or irrational does not account for the complexity and variability of criminal decision making.

Question 20

If a person gives a gift to another person,an economist would say that it is because
A) the marginal benefit of giving the gift is at least as great as the marginal cost of giving the gift.
B) the marginal cost of giving the gift is at least as great as the marginal benefit of giving the gift.
C) he expects to receive a gift in return.
D) none of the above

Accepted Answer

According to the principle of rational choice, a person will take an action only if the marginal benefit of the action is at least as great as the marginal cost of the action. Giving a gift is an action, and the economist would assume that the person giving the gift has weighed the costs (e.g. the price of the gift, the time and effort it takes to choose the gift) against the benefits (e.g. the pleasure of giving, the potential gratitude of the gift recipient) and determined that the benefits outweigh the costs. Therefore, the economist would say the person is giving the gift because the marginal benefit of giving the gift is at least as great as the marginal cost of giving the gift.

Quiz 21: Building Theories to Explain Everyday Life: From Observations to Questions to Theories to Predictions

Which of the following can a homebuyer pay for indirectly when purchasing a home?

In general,in a given rich country the __ the opportunity cost for a woman of having and raising a child,the _ children she will have.

Theories should be judged based upon how

A person tends to be __ likely to lose her temper with a boss than with a friend because the opportunity cost of losing her temper with her boss tends to be _ than the opportunity cost of losing her temper with her friend.

The efficient number of gifts that a gift-giver wants to give is the number at which the marginal benefits of giving a gift are__________________the marginal costs of giving a gift.

House A has an ocean view and House B does not.In all other respects,the two houses are the same.The market price of house A is $2,300,000;the market price of house B is $1,600,000.The ocean view is valued at

Anna gives Billy a gift of $200.We can be sure that Billy will

George is a gift giver and Roger is a gift recipient.George has Roger in his utility function,but Roger does not have George in his utility function.Roger may try to get George to __________________ George's efficient number of gifts to (give) .

Those who say that economics is becoming an increasingly imperialist social science are suggesting that economics is

In general,a dry cleaner in a small town is __ likely to be unethical in his business practices than a dry cleaner in a large city.This is because the larger a percentage of the population a person is,the _likely that person will have to further engage with people he initially meets.

The _ the opportunity cost of bad behavior,the _ likely one is to exhibit bad behavior.

Which of the following is false?

We state that the evidence __________________ if evidence is consistent with a theory's predictions.

The larger a percentage of the population a person is,the __ likely that person will have to further engage with people she meets.This implies that she will generally be likely to behave unethically and poorly with the people in her town as the population of her town increases.

Which of the following is true?

Which of the following theories is not falsifiable or refutable?

To an economist,it is preferable to

If a person gives a gift to another person,an economist would say that it is because