GE Chapter 02 solutions_fmt

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1、Chapter2

2、EconomicMethodsandEconomicQuestions15Chapter2EconomicMethodsandEconomicQuestionsQuestions1.Shouldwesaythateconomicmodelsareadetailedorasimplifiedversionofthereality?Couldeconomistsbuildperfecteconomicmodels?Why?Answer:Economicmodelsaresimplifiedversionsofreal

3、ityastheytrytoabridgeacomplexeconomicsituation.Thissimplificationimpliesthattheymaynotbeperfectreplicasofreality.Therefore,weneedtotestthembyevaluatingtheirmatchwiththedata.Whenamodelisinconsistentwiththedata,economiststrytoadjustit,improveitorreplaceitasneeded.2.What

4、ismeantbyempiricism?Howdoempiricistsusehypotheses?Answer:Empiricalevidenceisasetoffactsestablishedbyobservationandmeasurement,whichareusedtoevaluateamodel.Empiricismreferstothepracticeofusingdatatotesteconomicmodels.Whenconductingempiricalanalysis,economistsrefertoamo

5、del’spredictionsashypotheses.Hypothesesarepredictions(typicallygeneratedbyamodel)thatcanbetestedwithdata.3.Whataretwoimportantpropertiesofeconomicmodels?Modelstendtobesimplifieddescriptionsofareal-worldphenomenon.Doesthismeanthattheyareunrealistic?Answer:Agoodeconomic

6、modelhastwoimportantproperties.First,itisanapproximation.Themodelpredictswhatwouldhappenonaverage.Second,itmakespredictionsthatcanbetestedwithdata.Amodelisasimplifieddescription,orrepresentation,ofreality.Becausemodelsaresimplified,theyarenotperfectreplicasofreality.H

7、owever,thisdoesnotmeanthattheyareunrealistic.Modelsareusuallysimplifiedinordertobeabletoisolatetherelationshipbetweentwovariables.Evenifamodelisbasedonsimplifiedassumptions,itmaystillhelpusmakegoodpredictionsandplanforthefuture.4.Howisthemeancalculatedfromaseriesofobs

8、ervations?Suppose5,000peopleboughtpopsiclesonahotsummerday.Iftheaveragenumberofpopsiclesthateachpersonboughtis2,howmanypopsiclesweresoldthatday?Answer:Themeanistheaveragevalueofasetofobservations.Itiscalculatedasthesumofallthedifferentitemsdividedbythenumberofitems.Th

9、eaveragevalueisthesumofallpopsiclessolddividedbythenumberofpeoplewhoboughtthem.Ifeachofthe5,000peopleboughtanaverageof2popsi