Question 1

Two variables are said to be negatively correlated if their values

Accepted Answer

A)  are always negative. 
B)  only decrease but never increase. 
C)  tend to move in the same direction. 
D)  tend to move in opposite directions. 
A)  are always negative. 
B)  only decrease but never increase. 
C)  tend to move in the same direction. 
D)  tend to move in opposite directions.

Question 2

Refer to the information provided in Table 22.1 below to answer the question(s) that follow.
Table 22.1
 $$\begin{array} { | l | l | } 
\hline \text { Person } & \text { Weight (lbs) } \
\hline \text { Abe } & 160 \
\hline \text { Boris } & 210 \
\hline \text { Calvin } & 300 \
\hline \text { Darius } & 185 \
\hline \text { Eddie } & 240 \
\hline \text { Franklin } & 175 \
\hline
\end{array}$$ A study to determine the effect that the weight of an average 6 ft. tall man has on the incidence of Type 2 diabetes was conducted in a small town. The six participants and their corresponding weights are listed in the table.
-Related to the Economics in Practice on p. 728: Refer to Table 22.1. When using regression discontinuity, if this study had a threshold of 200 pounds, the outcomes of which individuals would be compared?

Accepted Answer

A)  all six individuals 
B)  Abe and Calvin 
C)  Boris and Darius 
D)  Abe, Darius, and Franklin 
A)  all six individuals 
B)  Abe and Calvin 
C)  Boris and Darius 
D)  Abe, Darius, and Franklin

Question 3

Refer to the information provided in Table 22.3 below to answer the question(s) that follow.
Table 22.3
 $$\begin{array} { | c | c | c | } 
\hline \text { Point } & \begin{array} { c } 
\text { Aggregate } \
\text { Income } ( \boldsymbol { Y } )
\end{array} & \begin{array} { l } 
\text { Aggregate } \
\text { Consumption } ( \boldsymbol { C } )
\end{array} \
\hline \boldsymbol { A } & 15 & 19 \
\hline \boldsymbol { B } & 30 & 23 \
\hline C & 45 & 27 \
\hline D & 60 & 31 \
\hline E & 75 & 35 \
\hline F & 90 & 39 \
\hline
\end{array}$$ The data in the table was used to estimate the following consumption function: C = 20 + 0.2Y
-Refer to Table 22.3. The error for point B is equal to

Accepted Answer

A)  -3. 
B)  -1. 
C)  +1. 
D)  +3. 
A)  -3. 
B)  -1. 
C)  +1. 
D)  +3.

Question 4

A research project is conducted by offering a randomly selected 300 of the 500 local Toyota Prius owners a chance to use a new fuel additive for 6 months to see if their gas mileage improves. 225 of the 300 randomly selected Prius owners agree to the offer, 50 of those drop out of the project after 1 month, another 50 drop out after 2 months, and 25 more drop out after 3 months. The rest remain for the duration of the project. Using the intention to treat method, the results from how many of the Prius owners who were randomly selected should be included in the research project?

Accepted Answer

A)  100 
B)  200 
C)  225 
D)  300 
A)  100 
B)  200 
C)  225 
D)  300

Question 5

The term "statistical significance" is commonly applied to a p-value of

Accepted Answer

A)  ≤ 0.05. 
B)  ≤ 0.10. 
C)  ≥ 0.5. 
D)  ≥ 1. 
A)  ≤ 0.05. 
B)  ≤ 0.10. 
C)  ≥ 0.5. 
D)  ≥ 1.

Question 6

People who drive fuel-efficient vehicles tend to recycle more often than people who drive gas guzzlers. This is an example of

Accepted Answer

A)  correlation. 
B)  causation. 
C)  difference-in-differences. 
D)  statistical significance. 
A)  correlation. 
B)  causation. 
C)  difference-in-differences. 
D)  statistical significance.

Question 7

If the values of two variables move together, there is said to be causation, and if one variable results in a change in another variable, they are said to be correlated.

Accepted Answer

A) True 
 B)False

Question 8

Dierdre just gave birth to twins and now finds herself buying diapers on a weekly basis. Therefore, we can conclude that there is a causal relationship between having newborn twins and purchasing diapers for Dierdre.

Accepted Answer

A) True 
 B)False

Question 9

Refer to the information provided in Scenario 22.4 below to answer the question(s) that follow.
SCENARIO 22.4: In a randomized 1-year trial of 400 Mr. Lincoln hybrid tea rose bushes with rose rosette disease, 200 are slated to receive only a sulphur treatment (we will call this Group A), and the other 200 are slated to receive the sulphur treatment and an additional neem oil treatment 4 months later (we will call this Group B). Assume that the neem oil treatment is ineffective in treating rose rosette disease, so on average, the same proportion of rose bushes in each group will die of the disease. In Group B, 25 of the 200 rose bushes die in the 4-month period leading up to the neem oil treatment. Of the 175 bushes left, 25 die in the 8 months following the neem oil treatment. Since we know the neem oil treatment is ineffective, the rose bushes in Group A will, on average, suffer the same fate as those in Group B, with 25 bushes dying in the first 4 months and another 25 dying in the following 8 months.
-Related to the Economics in Practice on p. 727: Refer to Scenario 22.4. For Group A, what is the rate of death due to rose rosette disease?

Accepted Answer

A)  5% 
B)  12.5% 
C)  25% 
D)  50% 
A)  5% 
B)  12.5% 
C)  25% 
D)  50%

Question 10

People who are fans of NASCAR tend to eat less organic produce than people who are not NASCAR fans. This is an example of

Accepted Answer

A)  correlation. 
B)  causation. 
C)  difference-in-differences. 
D)  statistical significance. 
A)  correlation. 
B)  causation. 
C)  difference-in-differences. 
D)  statistical significance.

Question 11

A strategy that identifies the causal effects of a policy or factor by looking at two samples that lie on either side of a threshold or cutoff is called intention to treat.

Accepted Answer

A) True 
 B)False

Question 12

Refer to the information provided in Table 22.3 below to answer the question(s) that follow.
Table 22.3
 $$\begin{array} { | c | c | c | } 
\hline \text { Point } & \begin{array} { c } 
\text { Aggregate } \
\text { Income } ( \boldsymbol { Y } )
\end{array} & \begin{array} { l } 
\text { Aggregate } \
\text { Consumption } ( \boldsymbol { C } )
\end{array} \
\hline \boldsymbol { A } & 15 & 19 \
\hline \boldsymbol { B } & 30 & 23 \
\hline C & 45 & 27 \
\hline D & 60 & 31 \
\hline E & 75 & 35 \
\hline F & 90 & 39 \
\hline
\end{array}$$ The data in the table was used to estimate the following consumption function: C = 20 + 0.2Y
-Refer to Table 22.3. Which of the following points is (are) the worst fit for the given consumption function?

Accepted Answer

A)  A 
B)  D and F 
C)  E 
D)  F 
A)  A 
B)  D and F 
C)  E 
D)  F

Question 13

Refer to the information provided in Table 22.2 below to answer the question(s) that follow.
Table 22.2
 $$\begin{array} { | c | c | c | } 
\hline \text { Point } & \begin{array} { c } 
\text { Aggregate } \
\text { Income } ( Y )
\end{array} & \begin{array} { l } 
\text { Aggregate } \
\text { Consumption } ( C )
\end{array} \
\hline \boldsymbol { A } & 10 & 14 \
\hline B & 20 & 23 \
\hline C & 30 & 25 \
\hline D & 40 & 26 \
\hline E & 50 & 34 \
\hline F & 60 & 39 \
\hline
\end{array}$$ The data in the table was used to estimate the following consumption function: C = 12 + 0.4Y
-Refer to Table 22.2. The error for point B is equal to

Accepted Answer

A)  -3. 
B)  -2. 
C)  +2. 
D)  +3. 
A)  -3. 
B)  -2. 
C)  +2. 
D)  +3.

Question 14

Refer to the information provided in Scenario 22.5 below to answer the question(s) that follow.
SCENARIO 22.5: The tiny nation of Bugaboo consists of two virtually identical islands, Achoo and Zoink, separated by the Strait of Dingo. The islands are similar in geography and population. The only telephone service on the islands is cellular, and the only cellular provider on the islands is the government-owned Bugaboo Communications Company, which charges a standardized rate of 20 Bugabucks per minute. Both islands add on an additional $5 Bugabucks-per-minute usage tax. As a way to increase revenue, the island governor of Zoink decided to increase the usage tax to $10 per minute, effective January 1, 2017. The average monthly cellphone usage per month is listed in the table below.
  
-Refer to Scenario 22.5. The total cost of telephone service for residents of Achoo in 2016 is ________ Bugabucks.

Accepted Answer

A)  4,500 
B)  22,500 
C)  90,000 
D)  112,500 
A)  4,500 
B)  22,500 
C)  90,000 
D)  112,500

Question 15

Refer to the information provided in Table 22.1 below to answer the question(s) that follow.
Table 22.1
 $$\begin{array} { | l | l | } 
\hline \text { Person } & \text { Weight (lbs) } \
\hline \text { Abe } & 160 \
\hline \text { Boris } & 210 \
\hline \text { Calvin } & 300 \
\hline \text { Darius } & 185 \
\hline \text { Eddie } & 240 \
\hline \text { Franklin } & 175 \
\hline
\end{array}$$ A study to determine the effect that the weight of an average 6 ft. tall man has on the incidence of Type 2 diabetes was conducted in a small town. The six participants and their corresponding weights are listed in the table.
-Related to the Economics in Practice on p. 728: Refer to Table 22.1. When using regression discontinuity, if this study had a threshold of 180 pounds, the outcomes of which individuals would be compared?

Accepted Answer

A)  all six individuals 
B)  Franklin and Darius 
C)  Abe and Franklin 
D)  Boris, Calvin, Darius, and Eddie 
A)  all six individuals 
B)  Franklin and Darius 
C)  Abe and Franklin 
D)  Boris, Calvin, Darius, and Eddie

Question 16

Refer to the information provided in Scenario 22.5 below to answer the question(s) that follow.
SCENARIO 22.5: The tiny nation of Bugaboo consists of two virtually identical islands, Achoo and Zoink, separated by the Strait of Dingo. The islands are similar in geography and population. The only telephone service on the islands is cellular, and the only cellular provider on the islands is the government-owned Bugaboo Communications Company, which charges a standardized rate of 20 Bugabucks per minute. Both islands add on an additional $5 Bugabucks-per-minute usage tax. As a way to increase revenue, the island governor of Zoink decided to increase the usage tax to $10 per minute, effective January 1, 2017. The average monthly cellphone usage per month is listed in the table below.
  
-Related to the Economics in Practice on p. 727: Refer to Scenario 22.5. Using the difference-in-differences method, what is the estimated effect of the increase in the usage tax on the average number of minutes used monthly per resident in Zoink?

Accepted Answer

A)  -225 
B)  -425 
C)  -650 
D)  -1,075 
A)  -225 
B)  -425 
C)  -650 
D)  -1,075

Question 17

Refer to the information provided in Scenario 22.5 below to answer the question(s) that follow.
SCENARIO 22.5: The tiny nation of Bugaboo consists of two virtually identical islands, Achoo and Zoink, separated by the Strait of Dingo. The islands are similar in geography and population. The only telephone service on the islands is cellular, and the only cellular provider on the islands is the government-owned Bugaboo Communications Company, which charges a standardized rate of 20 Bugabucks per minute. Both islands add on an additional $5 Bugabucks-per-minute usage tax. As a way to increase revenue, the island governor of Zoink decided to increase the usage tax to $10 per minute, effective January 1, 2017. The average monthly cellphone usage per month is listed in the table below.
  
-Refer to Scenario 22.5. The total cost of telephone service for residents of Zoink in 2016 is ________ Bugabucks.

Accepted Answer

A)  4,800 
B)  24,000 
C)  96,000 
D)  120,000 
A)  4,800 
B)  24,000 
C)  96,000 
D)  120,000

Question 18

The most important statistical tool in empirical economics is

Accepted Answer

A)  regression analysis. 
B)  intention to treat. 
C)  causation. 
D)  difference-in-differences. 
A)  regression analysis. 
B)  intention to treat. 
C)  causation. 
D)  difference-in-differences.

Question 19

Refer to the information provided in Scenario 22.5 below to answer the question(s) that follow.
SCENARIO 22.5: The tiny nation of Bugaboo consists of two virtually identical islands, Achoo and Zoink, separated by the Strait of Dingo. The islands are similar in geography and population. The only telephone service on the islands is cellular, and the only cellular provider on the islands is the government-owned Bugaboo Communications Company, which charges a standardized rate of 20 Bugabucks per minute. Both islands add on an additional $5 Bugabucks-per-minute usage tax. As a way to increase revenue, the island governor of Zoink decided to increase the usage tax to $10 per minute, effective January 1, 2017. The average monthly cellphone usage per month is listed in the table below.
  
-Refer to Scenario 22.5. The total cost of telephone service for residents of Achoo in 2017 is ________ Bugabucks.

Accepted Answer

A)  5,150 
B)  25,750 
C)  103,000 
D)  128,750 
A)  5,150 
B)  25,750 
C)  103,000 
D)  128,750

Question 20

Refer to the information provided in Table 22.3 below to answer the question(s) that follow.
Table 22.3
 $$\begin{array} { | c | c | c | } 
\hline \text { Point } & \begin{array} { c } 
\text { Aggregate } \
\text { Income } ( \boldsymbol { Y } )
\end{array} & \begin{array} { l } 
\text { Aggregate } \
\text { Consumption } ( \boldsymbol { C } )
\end{array} \
\hline \boldsymbol { A } & 15 & 19 \
\hline \boldsymbol { B } & 30 & 23 \
\hline C & 45 & 27 \
\hline D & 60 & 31 \
\hline E & 75 & 35 \
\hline F & 90 & 39 \
\hline
\end{array}$$ The data in the table was used to estimate the following consumption function: C = 20 + 0.2Y
-Refer to Table 22.3. The error for point E is equal to

Accepted Answer

A)  -2. 
B)  0. 
C)  +1. 
D)  +3. 
A)  -2. 
B)  0. 
C)  +1. 
D)  +3.

Two variables are said to be negatively correlated if their values

The term "statistical significance" is commonly applied to a p-value of

People who drive fuel-efficient vehicles tend to recycle more often than people who drive gas guzzlers. This is an example of

If the values of two variables move together, there is said to be causation, and if one variable results in a change in another variable, they are said to be correlated.

Dierdre just gave birth to twins and now finds herself buying diapers on a weekly basis. Therefore, we can conclude that there is a causal relationship between having newborn twins and purchasing diapers for Dierdre.

People who are fans of NASCAR tend to eat less organic produce than people who are not NASCAR fans. This is an example of

A strategy that identifies the causal effects of a policy or factor by looking at two samples that lie on either side of a threshold or cutoff is called intention to treat.

The most important statistical tool in empirical economics is

The Scope and Method of Economics

The Economic Problem: Scarcity and Choice

Demand, Supply, and Market Equilibrium

Demand and Supply Applications

Elasticity

Household Behavior and Consumer Choice

The Production Process: the Behavior of Profit-Maximizing Firms

Short-Run Costs and Output Decisions

Long-Run Costs and Output Decisions

Input Demand: the Labor and Land Markets

Input Demand: the Capital Market and the Investment Decision

General Equilibrium and the Efficiency of Perfect Competition

Monopoly and Antitrust Policy

Oligopoly

Monopolistic Competition

Externalities, Public Goods, and Common Resources

Uncertainty and Asymmetric Information

Income Distribution and Poverty

Public Finance: the Economics of Taxation

International Trade, Comparative Advantage, and Protectionism

Economic Growth in Developing Economies

Filters

Exam 22: Critical Thinking About Research

Two variables are said to be negatively correlated if their values

The term "statistical significance" is commonly applied to a p-value of

People who drive fuel-efficient vehicles tend to recycle more often than people who drive gas guzzlers. This is an example of

If the values of two variables move together, there is said to be causation, and if one variable results in a change in another variable, they are said to be correlated.

Dierdre just gave birth to twins and now finds herself buying diapers on a weekly basis. Therefore, we can conclude that there is a causal relationship between having newborn twins and purchasing diapers for Dierdre.

People who are fans of NASCAR tend to eat less organic produce than people who are not NASCAR fans. This is an example of

A strategy that identifies the causal effects of a policy or factor by looking at two samples that lie on either side of a threshold or cutoff is called intention to treat.

The most important statistical tool in empirical economics is

The Scope and Method of Economics

The Economic Problem: Scarcity and Choice

Demand, Supply, and Market Equilibrium

Demand and Supply Applications

Elasticity

Household Behavior and Consumer Choice

The Production Process: the Behavior of Profit-Maximizing Firms

Short-Run Costs and Output Decisions

Long-Run Costs and Output Decisions

Input Demand: the Labor and Land Markets

Input Demand: the Capital Market and the Investment Decision

General Equilibrium and the Efficiency of Perfect Competition

Monopoly and Antitrust Policy

Oligopoly

Monopolistic Competition

Externalities, Public Goods, and Common Resources

Uncertainty and Asymmetric Information

Income Distribution and Poverty

Public Finance: the Economics of Taxation

International Trade, Comparative Advantage, and Protectionism

Economic Growth in Developing Economies

Filters