Q: Suppose the opportunity cost of attending university is $17.60 per hour, 50 hours per week, for 28 weeks per year. What is the total opportunity cost for one year?

$17.60 \times 50 \times 28 = $24,640

Q: If the average wage for college graduates is $56,182 and for high school graduates is $39,152, what is the percentage difference?

$\frac{56,182 - 39,152}{39,152} \times 100 \approx 43.5\%$

Question 1

Which of the following best describes a model in economics?

Accepted Answer

A simplified description of reality used to explain and predict economic phenomena.

Question 2

Why do economists use data when working with models?

Accepted Answer

To evaluate the accuracy of models and understand how the world works.

Question 3

Suppose the opportunity cost of attending university is $17.60 per hour, 50 hours per week, for 28 weeks per year. What is the total opportunity cost for one year?

Accepted Answer

$17.60 	imes 50 	imes 28 = $24,640

Question 4

According to the scientific method in economics, what are the two main steps?

Accepted Answer

Developing models and testing those models using data.

Question 5

If each additional year of education increases wages by 10%, what is the formula for wage after $n$ years, starting from $15.00$ per hour?

Accepted Answer

$15.00 	imes (1.1)^n$

Question 6

Using the wage formula $15.00 	imes (1.1)^4$, what is the predicted wage after 16 years of education?

Accepted Answer

$21.9615

Question 7

If the average wage for college graduates is $56,182 and for high school graduates is $39,152, what is the percentage difference?

Accepted Answer

$\frac{56,182 - 39,152}{39,152} 	imes 100 \approx 43.5\%$

Question 8

Which statement about correlation and causality is correct?

Accepted Answer

Correlation does not imply causality.

Question 9

What is a spurious correlation?

Accepted Answer

A statistical relationship between two variables that is not due to any direct connection.

Question 10

In the context of the Wright brothers' airplane experiments, what was the key reason for their success?

Accepted Answer

They built models and tested them in a wind tunnel before building the actual airplane.

Question 11

Which of the following is an example of reverse causality?

Accepted Answer

Assuming that exercising daily causes lower mortality, when in fact healthier people are more likely to exercise.

Question 12

Why might the mean not be a good measure of central tendency in a highly skewed income distribution?

Accepted Answer

Because the mean can be distorted by extreme values.

Question 13

If a model predicts a 46% increase in wages for college graduates compared to high school graduates, but the actual data shows a 43.5% increase, what does this suggest about the model?

Accepted Answer

The model is reasonably accurate, but not exact.

Question 14

Which of the following is a controlled experiment in economics?

Accepted Answer

Subjects are randomly assigned to treatment and control groups by the researcher.

Question 15

Given the function $Y = 5 + 2X$, what is the value of $Y$ when $X = 3$?

Accepted Answer

$Y = 11$

Question 16

If the sum of two numbers is 385 and their difference is 97, what are the two numbers?

Accepted Answer

241 and 144

Question 17

A fishing boat brings in 5,000 pounds of fish, selling cod at $2.00 per pound and haddock at $1.50 per pound. The total revenue is $9,000. How many pounds of cod were caught?

Accepted Answer

2,000 pounds

Question 18

Which of the following is an omitted variable problem?

Accepted Answer

Ignoring the effect of cow health when studying the impact of naming cows on milk production.

Question 19

What is the main difference between a natural experiment and a controlled experiment in economics?

Accepted Answer

In a natural experiment, group assignment is determined by external factors, not by the researcher.

Models, Data, and the Scientific Method in Microeconomics

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