ch 01 text ans

1-1       (Key Question)  Use the economic perspective to explain why someone who is normally a light eater at a standard restaurant may become somewhat of a glutton at a buffet-style restaurant which charges a single price for all you can eat.

1-2       What is the scientific method and how does it relate to theoretical economics?  What is the difference between a hypothesis and an economic law or principle?

1-3       Why is it significant that economics is not a laboratory science?  What problems may be involved in deriving and applying economic principles?

1-4

Explain the following statements:

a.   “Good economic policy requires good economic theory.”

b.   “Generalization and abstraction are nearly synonymous.”

c.   “Facts serve to sort out good and bad hypotheses.”

d.   “The other things equal assumption helps isolate key economic relationships.”

1-5       (Key Question)  Explain in detail the interrelationships between economic facts, theory, and policy.  Critically evaluate this statement:  “The trouble with economic theory is that it is not practical.  It is detached from the real world.”

1-6              To what extent do you accept the eight economic goals stated and described in this chapter?  What priorities would you assign to them?

1-7       (Key Question)  Indicate whether each of the following statements applies to microeconomics or macroeconomics:

1-8       (Key Question)  Identify each of the following as either a positive or a normative statement:

1-9       (Key Question)  Explain and give an illustration of (a) the fallacy of composition; and (b) the “after this, therefore because of this” fallacy.  Why are cause-and-effect relationships difficult to isolate in the social sciences?

1-10          Suppose studies show that students who study more hours receive higher grades.  Does this relationship guarantee that any particular student who studies longer will get higher grades?

1-11          Studies indicate that married men on average earn more income than unmarried men of the same age.  Why must we be cautious in concluding that marriage is the cause and higher income is the effect?

1-12     (Last Word)  Use the economic perspective to explain the behavior of the workers (rather than the customers) observed at a fast-food restaurant.  Why are these workers there, rather than, say cruising around in their cars?  Why do they work so diligently?  Why do so many of them quit these jobs once they have graduated high school?