Question 1

What is the "reverse causality" problem in determining cause and effect?
A)It is a problem that occurs when one concludes that a change in variable X caused a change in variable Y when in actual fact,it is a change in variable Z that caused a change in variable Y.
B)It is a problem that occurs when one observes that a change in variable X caused a change in variable Y which caused a change in variable Z and concludes that a change in variable X caused a change in variable Z.
C)It is a problem that occurs when one concludes that a change in variable X caused a change in variable Y when in actual fact,it is a change in variable Y that caused a change in variable X.
D)It is a problem that arises when two variables are inter-connected so that a change in variable X causes a change in variable Y,and a change in variable Y causes a change in variable X.

Accepted Answer

The reverse causality problem occurs when one concludes that a change in variable X caused a change in variable Y when in actual fact, it is a change in variable Y that caused a change in variable X. This can happen if there is a bidirectional relationship between the variables, and it can be difficult to determine which variable is causing the change in the other.

Question 2

The number of people who have gray hair is very high among residents living in Florida.A student concludes that living in Florida causes hair to turn gray.What is the flaw in this student's reasoning?
A)The student is drawing a false conclusion by making the mistake of omitting critical variables such as the age and gender of the residents.
B)The student is using an inadequate sample size.
C)The student is drawing a false conclusion;he is confusing cause and effect.
D)The student has failed to take into account other causes of gray hair.

Accepted Answer

The student is making a classic error of confusing correlation with causation. While there may be a correlation between living in Florida and having gray hair, this does not necessarily mean that living in Florida causes hair to turn gray. There are likely other factors at play that contribute to the high incidence of gray hair among Florida residents.

Question 3

Figure 1-6 
-Refer to Figure 1-6.Calculate the area of the trapezoid X.
A)$361
B)$450
C)$1,020
D)$1,140

Accepted Answer

The answer of Figure 1-6 
-Refer to Figure 1-6.Calculate the...

Question 4

An "omitted variable" is
A)a variable which is purposely omitted from an economic analysis.
B)a variable which is inadvertently omitted from an economic analysis.
C)a variable that has no impact on other variables in an economic analysis.
D)a variable that affects other variables and its omission from economic analysis can lead to false conclusions about cause and effect.

Accepted Answer

The answer of An "omitted variable" is
A)a variable which is...

Question 5

Table 1-8
 $$\begin{array} { | c | c | } 
\hline \text { Year } & \begin{array} { c } 
\text { Flat-Panel } \
\text { TV Sets } \
\text { (millions) }
\end{array} \
\hline 2012 & 1.0 \
\hline 2013 & 1.5 \
\hline 2014 & 7.3 \
\hline 2015 & 12.7 \
\hline 2016 & 20.0 \
\hline
\end{array}$$
-Refer to Table 1-8.The table above shows the sales of flat-panel television sets in Central America.Present the information using a bar graph.

Accepted Answer

The answer of Table 1-8
 \[\begin{array} { | c |...

Question 6

Table 1-7
 $$\begin{array} { | c | c | } 
\hline \text { Year } & \text { LED Light Bulbs (millions) } \
\hline 2012 & 12.5 \
\hline 2013 & 14.0 \
\hline 2014 & 17.2 \
\hline 2015 & 20.0 \
\hline 2016 & 21.7 \
\hline
\end{array}$$
-Refer to Table 1-7.The table above shows the sales of LED light bulbs in North America.Present the information using a bar graph.

Accepted Answer

The answer of Table 1-7
 \[\begin{array} { | c |...

Question 7

You explain to your friend Haslina,who runs a catering service called "Meals in a Zip," about an economic theory which asserts that consumers will purchase less of a product at higher prices than they will at lower prices.She contends that the theory is incorrect because over the past two years she has raised the price of her catered meals and yet has seen a brisk increase in sales.How would you respond to Haslina?
A)Haslina is right;she has evidence to back her claim.The theory must be erroneous.
B)I will explain to her that she is making the error of reverse causality: it is the increase in demand that has enabled her to raise her prices.
C)I will explain to her that there are some omitted variables that have contributed to an increase in her sales such as changes in income.
D)Haslina is making the mistake of assuming that correlation implies causation.

Accepted Answer

The answer of You explain to your friend Haslina,who runs...

Quiz 1: Economics: Foundations and Models

What is the "reverse causality" problem in determining cause and effect?

The number of people who have gray hair is very high among residents living in Florida.A student concludes that living in Florida causes hair to turn gray.What is the flaw in this student's reasoning?

Figure 1-6 -Refer to Figure 1-6.Calculate the area of the trapezoid X.

An "omitted variable" is