11) One reason why economists often use models in their analysis is that A) a model helps us to…
11) One reason why economists often use models in their analysis is that
A) a model helps us to understand, explain, and predict economic phenomena in the real world.
B) a model accurately pictures every detail of the real world economy.
C) a model relates to individual thought processes rather than behavior.
D) it is relatively easy to perfectly specify a model.
12) An economic model should capture
A) the essential relationships that help to analyze the problem.
B) all possible variables that apply to the problem.
C) only social value related variables.
D) all of the above.
13) One problem with constructing a perfectly complete realistic economic model is that
A) it would be too simplistic to have any value.
B) it would be far too complicated to analyze.
C) politicians see little value in such a model.
D) None of the above is true.
14) Which of the following statements is true?
A) No economic model captures every detail that affects a problem.
B) Economic models always make accurate predictions about behaviors.
C) Economic models must fully reflect reality.
D) Economic models use economists' opinions with no use of data.
15) A map is an example of a model because a map
A) realistically describes an area.
B) is always as complex as space will permit.
C) is two-dimensional.
D) is a simplified representation of reality.
16) Holding all variables constant but one and assessing the impact of the one variable that has changed is an example of using
A) the ceteris paribus assumption.
B) an economic model based on unrealistic assumptions.
C) a flawed economic model.
D) an untestable proposition.
17) The term ceteris paribus means
A) the greatest good for all.
B) the study of scarcity and choice.
C) all other things remaining constant or equal.
D) value-free and testable.
18) In order to study how changing price affects consumer decisions, we must assume all other factors, such as income and the prices of other goods are constant. This assumption is best know as
A) rationality.
B) ceteris paribus.
C) normative economics.
D) behavioral economics.
19) Which of the following is an example of an application of the ceteris paribus assumption?
A) An analysis of how price changes affect how much of a good people will purchase when all other factors are held constant
B) An analysis of how people purchase more goods when prices decline and income increases
C) After reading an article on the dangers of high-fat diets, an individual buys less red meat when prices increase
D) An analysis of how worker productivity increases when a firm invests in new machines and training programs
20) Ceteris paribus means
A) making all the necessary changes.
B) other things constant.
C) for certain parameters.
D) let the buyer beware.
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