a.
gather data, evaluate the data, formulate a hypothesis, support or refute the hypothesis
b.
formulate a hypothesis, gather data, evaluate the results, support or refute the hypothesis
c.
formulate a hypothesis, support or refute the hypothesis, gather data, evaluate the data
d.
support or refute the hypothesis, evaluate the results, gather data, formulate a hypothesis
ANSWER:
b
72. An economist has been asked to explain why the price of three-bedroom homes has increased recently. Which steps should the economist take in order to assemble a scholarly answer?
a.
develop a hypothesis, test the proposition by engaging in empirical analysis, and examine the data to see whether it fits with the facts
b.
gather data on vacation home prices and seemingly unrelated variables in order to look for associations, then formulate a hypothesis based on those unexpected associations
c.
because the construction industry is controlled by a few large companies, the economist should gather data from other similarly structured industries to determine a theory
d.
use a questionnaire to determine why people are not entering the rental market and create a theory based on this data
ANSWER:
a
73. Why is economics different from a “hard” science such as physics?
a.
Economists cannot easily control all the variables that might influence human behaviour.
b.
Economists need to control fewer variables than what is found in a physics experiment.
c.
Economic experiments are easier to conduct than those in physics.
d.
Economists abstract from reality in creating their theories.
ANSWER:
a
74. Which statement best describes the relationship between theory and hypothesis?
a.
A hypothesis is a theory whose formulation relies on mathematics.
b.
A theory may result from a tested and confirmed hypothesis.
c.
“Theory” and “hypothesis” are interchangeable terms meaning the same thing.
d.
A hypothesis may result from a tested and confirmed theory.
ANSWER:
b
75. Which of the following is the best test of an economic theory?
a.
the accuracy of its assumptions
b.
the rigour of its mathematical formulation
c.
its ability to explain and predict
d.
the level of real-world detail it captures
ANSWER:
c
76. An economist might hypothesize that people will buy fewer concert tickets at a price of $250 than at $180. For the hypothesis to become a theory, it would first need to be tested. Which of the following observations would seem to support the economist’s hypothesis?
a.
Individuals buy fewer concert tickets because they are purchasing other forms of entertainment.
b.
Concert consumption varies with different age groups.
c.
Individuals in each geographic region respond to an increase in price by purchasing fewer concert tickets.
d.
People in each geographic region buy the same amount of concert tickets regardless of the price.
ANSWER:
c
77. What does the term ceteris paribus mean when used by an economist?
a.
Their conclusions are based on normative rather than positive economic analysis.
b.
The causal relationship between two economic variables cannot be determined.
c.
The analysis is true for the individual but not for the economy as a whole.
d.
All other variables except the ones specified are assumed to be constant.
ANSWER:
d
78. What does the term ceteris paribus mean?
a.
Everything is variable.
b.
What is true for the individual is not necessarily true for the whole.
c.
All variables except those specified are constant.
d.