Which of the following best describes how economists test the empirical predictions of economic models?
A. Economists collect and analyze real-world observations of people's actions to discern if those actions accord with theories' predictions.
B. Economists survey individuals to learn about how people think through decisions about how much to purchase or to produce.
C. Based on theories about thought processes, economists seek to determine which thought processes predominate in determining how a person decides what actions to take.
D. Recognizing that people always do what they say they will do, economists rely exclusively on information gleaned from polls and surveys conducted by poll takers and market researchers.
Answer: A
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Economists agree that the CPI
A) is a near perfect measure of the cost of living. B) has no relation to the cost of living. C) is a possibly biased measure of the cost of living. D) almost always shows the cost of living rising less rapidly than is the case in reality. E) overstates inflation by about 4.1 percentage points a year.
The increased participation of married women in the work force reflects the increasing opportunity cost of not working
Indicate whether the statement is true or false
Which of the following is a difference between a tax and a subsidy? a. A tax is money paid to the government, while a subsidy is money received from the government
b. There is a deadweight loss associated with a tax, while there is no deadweight loss associated with a subsidy. c. A tax increases quantity supplied, while a subsidy decreases quantity supplied. d. A tax increases consumer surplus, while a subsidy decreases producer surplus
The law of diminishing marginal product shows the relationship
A. between inputs and outputs for a firm in the long run. B. between short-run and long-run outputs of a firm. C. between inputs and outputs for a firm in the short run. D. between accounting and economic profits.