Question

1) Zero correlation between two variable implies that ( )

A) The variable are not related to each other

B) Both variable move in the same direction

C) Both variable move in the opposite direction

D) Change in one variable causes the other to change

2) Total cost falls when marginal cost is ( ), and total cost rises when marginal cost is ( ).

A) negative; positive B) zero; negative

C) positive; negative D)zero; positive

3) Which of the following is an example of marginal analysis?

A) To determine the optimal output that a firm should sell, the manager calculates the total revenue earned by selling different levels of output.

B) To determine the optimal number of workers, a firm calculates the net benefits of hiring an extra worker.

C) To determine the optimal amount of fertilizer to be used, a farmer calculates the total benefits of using a given amount of fertilizer.

D) To choose the optimal apartment to rent, an individual estimates the net benefits of renting an apartment close to his place of work.

4) Which of the following statement is true about data?

A) Facts that describe the world are not considered data

B) Empiricism does not necessarily involve data

C) Consistency of models can be checked using data

D) Convincing data analysis in economics relies on using a small sample

Answer 1

1. A

Explanation: Zero correlation means the variables are unrelated.

2. A

Explanation: Marginal cost is the additional cost for an additional unit of good

3. B

Explanation: In marginal analysis, the additional cost or benefit of an additional unit is analyzed.

4. Option C

Explanation: Data relates to facts and it helps in checking consistency of models.