opportunity costs
d.
normative analysis
ANSWER:
b
88. “The more I study the better I do on tests” is an example of which concept?
a.
causation
b.
correlation
c.
opportunity costs
d.
normative analysis
ANSWER:
b
89. Which statement best describes correlation?
a.
Two sets of phenomena may be related, but one does not necessarily cause the other.
b.
When two phenomena are not observed together, one still causes the other.
c.
When two phenomena are repeatedly observed together, one must cause the other.
d.
Two sets of phenomena are not related and one may in fact cause the other.
ANSWER:
a
90. If individuals who sit in the back of the classroom receive lower grades on average than the rest of the class, does that mean that sitting in the back of a classroom causes one to perform poorly on exams?
a.
The reoccurrence of such a relationship is sufficient evidence that sitting in the back of a classroom will lead to lower grades.
b.
It is not possible for an economist to determine causation between variables.
c.
The reoccurrence of a certain relationship between two variables does not necessarily imply causation.
d.
The reoccurrence of such a relationship is sufficient evidence that students who receive low grades prefer to keep a low profile and always sit in the back of the classroom.
ANSWER:
c
91. Eleven-year-old Benjen observes that people who play basketball are taller than average and tells his mom that he's going to play basketball because it will make him tall. What is the problem with Benjen’s logic?
a.
He is committing the fallacy of composition.
b.
He is committing the fallacy of decomposition.
c.
He is violating the ceteris paribus assumption.
d.
He is mistaking correlation for causation.
ANSWER:
d
92. Many people have heard that the U.S. stock market rises when a team from the National Football Conference (NFC) wins the Super Bowl, and falls when a team from the American Football Conference (AFC) is victorious. If you conclude that a causal relationship exists between the outcome of the Super Bowl and stock prices, what mistake are you making?
a.
You are committing the fallacy of composition.
b.
You are violating the ceteris paribus assumption.
c.
You are confusing correlation with causation.
d.
You are confusing the direction of causality; stock prices determine which team wins the Super Bowl.
ANSWER:
c
93. A student football team manager examined variables influencing the team's record and concluded that the best scores resulted when the "third-string" team played the most minutes. Therefore, he recommended that the third-string team become the first team. Why is the manager’s conclusion probably erroneous?
a.
He failed to recognize that correlation is not causation.
b.
He did not review the entire game strategy carefully enough.
c.
He committed the fallacy of composition.
d.
He confused positive and normative analysis.
ANSWER:
a
94. If rain dancing is correlated with rain, does it necessarily mean that rain dancing causes rain?
a.
No. This is an example of the fallacy of composition.
b.
No. Two variables may be correlated without one necessarily causing the other.
c.
Yes. This is an example of a failure to properly employ the ceteris paribus assumption.
d.
Yes. If it rains after individuals have engaged in rain dancing, then causation is certainly at work.
ANSWER:
b
95. If Canadian consumers bought more gasoline in 2021 (when prices averaged $1.50 per litre) than they did in 1980 (when prices averaged $0.40 per litre), does that mean that people buy more gasoline at higher prices?