31) The process of developing hypotheses, testing them against facts, and using the results to construct theories is called:
A) opportunity cost calculation.
B) the scientific method.
C) marginal analysis.
D) microeconomics.
32) A "hypothesis" is:
A) a fundamental truth which all economists accept.
B) a tentative, untested principle.
C) the same as a normative statement.
D) always the result of induction.
33) From the perspective of economists, which term provides the highest degree of confidence for explaining economic behaviour?
A) an economic principle or a law
B) a fact
C) a hypothesis
D) an assumption
34) In constructing models, economists:
A) make simplifying assumptions.
B) include all available information.
C) must use mathematical equations.
D) attempt to duplicate the real world.
35) Economic models:
A) are of limited use because they cannot be tested empirically.
B) are limited to variables which are directly related to one another.
C) emphasize basic economic relationships by abstracting from the complexities of the real world.
D) are unrealistic and therefore of no practical consequence.
36) An economic model is:
A) a value judgment.
B) a fact.
C) built using theory.
D) built on correlations.
37) The term "ceteris paribus" means:
A) that if event A precedes event B, A has caused B.
B) that economics deals with facts, not values.
C) other things equal.
D) prosperity inevitably follows recession.
38) Suppose an economist says that "Other things equal, the lower the price of bananas, the greater the amount of bananas purchased." This statement indicates that:
A) the quantity of bananas purchased determines the price of bananas.
B) all factors other than the price of bananas (for example, consumer tastes and incomes) are assumed to be constant.
C) economists can conduct controlled laboratory experiments.
D) one cannot generalize about the relationship between the price of bananas and the quantity purchased.
39) The term "other things equal" means that: