Exam 21: Thinking Like a Modern Economist

Suppose a person buys only fruits and vegetables while at the grocery store,even though he or she hates fruits and vegetables and would much rather eat junk food.Much of the produce goes bad before it is consumed and must be thrown out.What name is given to this kind of behavior? Is it rational?

What is an empirical model? What is its usefulness?

If people start to buy more expensive fuel-efficient cars rather than cheaper SUVs, even though the additional cost of fuel-efficient cars is greater than the savings in gas over the life of the car, this would be explained by which of the following types of models?

Which of the following views most likely would belong to a behavioral economist?

Economists who use supply/demand models:

What distinguishes scientific from engineering models?

Two economists are arguing about how to approach a problem. The first economist says, "Look, I can see in the data that consumption rises when income rises. We need to build a model with an equation that relates the two." The second economist responds, "I can see that is the case, but we have to understand why that is true before we build any equations, and then we will see what the model says about the relationship between the two." What kind of economist is the second one likely to be?

A behavioral economist:

Andy is offered the following two income scenarios: (1)earn $10,000 the first year, $12,000 the second year, and $15,000 the third year or (2)earn $15,000 the first year, $12,000 the second year, and $10,000 the third year. Which is the rational option?

What is econometrics?

What is a game theory model? Give two examples of decisions by households or businesses that you think might be appropriately analyzed using game theory models.Give two examples of decisions by households or businesses for which the use of a game theory model might not be necessary.What is the harm of using a game theory model where it is not necessary?

A supply and demand model is a:

If behavioral economists do not believe that people are rational,what do they believe? Do behavioral economists believe that people are irrational?

All economists believe that:

Which of the following would not be part of the empirical approach when studying such questions as "Has abortion led to a decrease in the crime rate?"

Which type of economists rely on the widest array of models?

When Williams-Sonoma introduced its first bread baker at $200, sales were low. But when it decided to offer a fancier $300 version, sales of the $200 bread baker rose tremendously. An economist concluded that consumers needed another bread baker for comparison to decide whether the $200 bread baker was a deal. This economist is likely to be a(n):

When modern economists cannot solve a model analytically, they can estimate the solution by:

If a model assumes that people take into account other people's interests, it is probably a:

Which of the following models is best able to incorporate significant amounts of data?