Introduction Flashcards
(TF) The theory of economics provides a set of settled conclusions that are directly applicable to policy.
False. Economics is a method and a technique of thinking, rather than a doctrine providing settled conclusions for policy.
What was J.D. Salinger’s belief about limiting the signing of his books, and what was the actual outcome?
Salinger thought signing fewer books would limit profiting from his work. In reality, he had only partial control, leading to greater benefits for those who had signed copies.
(TF) A ban on commercial fishing will invariably lead to a decrease in the volume of fish harvested.
False. The effect depends on various factors, including preemptive behavior by fishermen.
Does increasing participation in customer-satisfaction surveys always make them more informative?
Not necessarily. It depends on who participates. Increased participation could mean different, not necessarily more informative, insights.
(TF) Free trade policies are universally good and benefit everyone.
False. Free trade has tradeoffs with winners and losers. The value depends on individual perspectives and national policy directions.
Who benefits and who loses from a $15 minimum wage policy?
There are tradeoffs. Some may benefit, others may lose. It’s important to estimate these impacts before promoting or voting on such policies.
How does the decision of the University of Oregon (UO) to move instruction online during the pandemic depend on other universities’ actions?
The decision likely depended on whether other universities moved online, showing the importance of understanding interdependencies in decision-making.
What are potential consequences of a ‘last hired, first fired’ protocol if the police funding is cut?
Recent diversity gains in police forces may be lost. This could mean that the real concerns motivating the defunding might not be met.
(Multiple Choice) How is Google’s ability to set prices for its services best understood? A) They can set any price they want. B) They have chosen a price of zero for searches. C) Firms can only choose price or quantity, not both.
C) Firms can only choose price or quantity, not both. Google’s choice of a zero price for searches demonstrates this.
(TF) A firm’s monopoly power in a product market implies it also has market power in labor markets.
False. Monopoly power in a product space does not necessarily mean the firm has market power in input markets like labor.
Why do we quote famous people? Is it for their reputation or relevance?
It’s often for their reputation, but there can be a trade-off between reputation and relevance. The quoted person’s significance in the context is crucial.
(TF) Economics is solely the study of financial systems and transactions.
False. Economics is the scientific study of human behavior, focusing on how humans coordinate their wants and allocate scarce resources.
(Multiple Choice) Microeconomics focuses on: A) Individual choices B) National policies C) Global markets
A) Individual choices. Microeconomics examines the choices of individual economic agents like people, households, and firms.
How does macroeconomics differ from microeconomics?
Macroeconomics focuses on collective implications of individual choices, typically at the national or global level, like inducing growth and avoiding recessions.
What is the ‘managerial modifier’ in the context of economics?
It emphasizes applications of economic theory to understand behavior of organizations and people within them, and extends to broader aspects like friendship, parenting, and community.
(TF) Economists only rely on theoretical models and do not engage in experiments.
False. Economists perform randomized control trials, lab experiments, and exploit natural experiments to identify causal relationships.
What is the role of scarcity in economics?
Scarcity is central to economics. It’s about how limited resources with alternative uses are allocated amongst competing ends.
(TF) Addressing climate change is solely a technological challenge.
False. It’s also a collective-action problem, involving trade-offs and decisions that affect overall social welfare.
What does the question ‘Should tuition be subsidized?’ entail in economic terms?
It involves considering who benefits, who pays, and the broader implications on social welfare and resource allocation.
(TF) Universal healthcare will uniformly make everyone healthier.
False. Its impact varies based on individual circumstances, including the least-well-off and most-well-off people in society.
What does it mean when there’s grade inflation in the academic context?
Grade inflation involves higher grades being awarded than previously for the same level of academic achievement. It affects labor-market outcomes by changing the cost and efficiency of hiring processes.
(TF) Legalizing methamphetamine would have similar consequences to legalizing cannabis.
False. The consequences depend on various factors, including societal impact and the nature of the drug market. Different drugs can lead to different outcomes and trade-offs.
What are the economic implications of requiring insurance companies to cover two nights in the hospital after childbirth?
It could lead to increased premiums. The real question is whether it’s worth making some parents more comfortable at the cost of others potentially losing basic care coverage.
Why is the gender disparity in orchestras significant, and what did ‘blind’ auditions reveal?
The disparity suggests potential discrimination. Blind auditions, where women were more likely to advance, indicate that previous audition processes might have been biased.
(Multiple Choice) Which method of distributing student football tickets is discriminatory? A) First come, first served. B) Random drawing. C) According to GPA. D) Raising the price. E) All of the above.
E) All of the above. Every method discriminates in some way, whether against the unlucky, those with lower GPAs, or those with less financial means.
(TF) Microeconomics and macroeconomics are essentially the same in their focus and methodology.
False. Microeconomics focuses on individual choices and constraints, while macroeconomics looks at collective implications of these choices on a larger scale.
Why is scarcity a fundamental concept in economics?
Scarcity is central because it involves the allocation of limited resources that have alternative uses, to satisfy unlimited wants.
How do taxes, like cigarette taxes, relate to overall welfare?
Taxes can be seen as a way to modify behavior for greater welfare. For example, cigarette taxes might make smokers better off by discouraging smoking.
(TF) Economics is a static field that does not evolve with real-world events.
False. Economics is dynamic and seeks to explain real-world events through observation, hypothesis, experimentation, and conclusion, adapting as new data and situations arise.
What is the importance of understanding incentives in policy design and social welfare?
Understanding incentives is crucial in determining whether they align with socially desirable outcomes or if they lead to unintended negative consequences.
(TF) The study of economics is limited to understanding market transactions and financial systems.
False. Economics broadly studies human behavior and decision-making in various contexts, not just markets and finance.
(Multiple Choice) The ‘managerial modifier’ in economics emphasizes: A) Financial management B) Organizational and individual behavior C) Government policy
B) Organizational and individual behavior. It focuses on how economic principles apply to behaviors within organizations and broader aspects like community and parenting.
How do natural experiments contribute to economic research?
Natural experiments allow economists to observe the effects of real-world events and policies, helping to identify causal relationships in situations where controlled experiments are not possible.
(TF) Addressing climate change is purely a scientific and environmental issue, without economic considerations.
False. Addressing climate change involves economic decisions, trade-offs, and collective-action problems, making it a significant issue in economics as well.
Why is it important to consider trade-offs in economic policy decisions?
Considering trade-offs helps in understanding the full implications of a policy, including its benefits and costs, and who gains and loses from it.
(TF) In economics, human behavior is considered predictable and consistent across all situations.
False. Economic models often rely on assumptions, but actual human behavior can vary widely and is influenced by a range of factors.
