Moodle quiz Flashcards
Which of the following describes a common cause (or confounding)?
Question 2Select one:
When you expect that an increase in A causes an increase in B, but really an increase in A causes a decrease in B.
When you expect that A causes B, but really B causes A.
When you expect that A causes B, but really some other variable C causes both A and B to occur together.
When you expect that A causes B, but really the two variables are completely unrelated to each other.
When you expect that A causes B, but really some other variable C causes both A and B to occur together.
By definition, when you expect that A causes B, but really some other variable C causes both A and B to occur together, there are two causal relationships (from C to A; and from C to B). This is a common cause (or confounding) - the confounding variable is C.
When you expect that A causes B, but really B causes A, what you are observing is reverse causation.
When you expect that an increase in A causes an increase in B, but really an increase in A causes a decrease in B, then this relationship is causal. It is not a common cause or confounding, because A is still causing the change in B, just as you expected (only in the opposite direction).
When you expect that A causes B, but really the two variables are completely unrelated to each other, this is spurious correlation.
The correct answer is: When you expect that A causes B, but really some other variable C causes both A and B to occur together.
Arama is a research economist and wants to investigate how a change in the rate of inflation affects the unemployment rate. In completing her investigation, it is likely that Arama will primarily use theories and models from:
macroeconomics, because her research question is about the aggregate economy as a whole.
microeconomics, because her research question is about the behaviour of individuals, firms, government, or markets.
macroeconomics, because her research question is about the behaviour of individuals, firms, government, or markets.
microeconomics, because her research question is about the aggregate economy as a whole.
macroeconomics, because her research question is about the aggregate economy as a whole.
macroeconomics, because her research question is about the aggregate economy as a whole.
A recent study concluded that eating ultra-processed foods causes lower mental wellbeing. This was based on a negative correlation between ultra-processed food consumption and mental wellbeing at the national level. However, you are fairly certain that this relationship is not causal. Which of the following statements could be used to explain why this correlation is not a causal relationship?
Question 3Select one:
There is a common cause, meaning that there is no explanation for why the relationship might arise other than the fact that the data shows a relationship.
The observed relationship is a spurious correlation, meaning that ultra-processed food consumption and mental wellbeing at are both related to some other variable that causes both of them to happen together.
There is reverse causation, meaning that low mental wellbeing actually causes ultra-processed food consumption, not the other way around.
Any of these statements could be used to explain why this correlation is not a causal relationship.
There is reverse causation, meaning that low mental wellbeing actually causes ultra-processed food consumption, not the other way around.
Which of the following is a characteristic of a good economic model?
Question 4Select one:
The model helps us to understand what we agree (and disagree) about.
All of these are correct.
The model’s predictions are consistent with evidence.
The model helps us to understand something important.
all of these are correct
Which of the following is the best explanation for the term ceteris paribus?
Question 5Select one:
The assumption that over time, models will have to be updated repeatedly to remain relevant.
The assumption that when we look at a change in a model, all other variables are held constant.
The assumption that when we look at a change in a model, other variables must change.
The assumption that models stay relevant over time because researchers can refer to statistics from when the model was made for context.
The assumption that when we look at a change in a model, all other variables are held constant.
f the average salary for economists increases by 30%, while the average salary for all other occupations increases by 10%, then ceteris paribus we can expect that:
Question 6Select one:
more students will enrol in economics degrees and fewer students will enrol in other degrees.
more students will enrol in economics degrees and more students will enrol in other degrees.
fewer students will enrol in economics degrees and fewer students will enrol in other degrees.
fewer students will enrol in economics degrees and more students will enrol in other degrees.
If the average salary for economists increases by 30%, while the average salary for all other occupations increases by 10%, the the ‘relative price’ of being an economist has increased. We can expect that more students will enrol in economics degrees (because they will now earn more than they would in other degrees) and fewer students will enrol in other degrees (because they will now earn less than they would in an economics degree).
The correct answer is: more students will enrol in economics degrees and fewer students will enrol in other degrees.
In Advice to a Young Tradesman Written an Old One, Benjamin Franklin wrote that: “Remember that Time is Money. He that can earn Ten Shillings a Day by his Labour, and goes abroad, or sits idle one half of that Day, tho’ he spends but Sixpence during his Diversion of Idleness, ought not to reckon That the only Expence; he has really spent or rather thrown away Five Shillings besides”. In this quote, Franklin is talking about the economic concept of:
economic rent.
relative prices.
opportunity cost.
incentives.
The correct answer is:
opportunity cost.
An iso-cost line shows:
Question 8Select one:
all of the combinations of inputs that have the same profit for the firm.
all of the combinations of inputs that result in the same output.
all of the combinations of inputs that have the same total cost.
all of the combinations of inputs that give consumers the same level of satisfaction.
Your answer is correct.
An iso-cost line joins up all of the combinations of inputs that have the same total cost (“iso” means “the same”, so “iso-cost” means “the same cost”).
The correct answer is: all of the combinations of inputs that have the same total cost.
Consider a simple model of production, with one output (widgets) and two inputs (capital, measured on the y-axis; and labour, measured on the x-axis). If the price of capital decreases, then the iso-cost lines in this model will:
Question 10Select one:
pivot inwards along the y-axis and become flatter.
pivot inwards along the x-axis and become steeper.
pivot outwards along the y-axis and become steeper.
pivot outwards along the x-axis and become flatter.
Your answer is correct.
Consider the two end points of a single iso-cost line. They represent a production technology where the firm uses only capital and no labour (this is the point where the iso-cost line touches the y-axis), and where the firm uses no capital and only labour (this is the point where the iso-cost line touches the x-axis).
The quantity of capital when the firm uses only capital is equal to TC/P, where TC is total cost and P is the price of capital. So, the point where the iso-cost line touches the y-axis is equal to TC/P.
The quantity of labour when the firm uses only labour is equal to TC/W, where TC is total cost and W is the price of labour (the wage). So, the point where the iso-cost line touches the x-axis is equal to TC/W.
The slope of the iso-cost line is equal to the relative price, -W/P.
Now, if the price of capital decreases, then TC/W is not affected (because TC hasn’t changed and W hasn’t changed). The point where the iso-cost line touches the x-axis is unchanged.
On the other hand, TC/P is now some larger number (another way to see this is to recognise that, because capital is less expensive, if the firm only uses capital, it can afford more). So, the iso-cost line will pivot outwards, along the y-axis. Also, because P is now a smaller number, -W/P is now a larger number, so the new iso-cost line will be steeper.
The correct answer is: pivot outwards along the y-axis and become steeper.
