The following are reasons for studying randomized controlled experiment in an econometrics course, with the exception of
A) at a conceptual level, the notion of an ideal randomized controlled experiment provides a benchmark against which to judge estimates of causal effects in practice.
B) when experiments are actually conducted, their results can be very influential, so it is important to understand the limitations and threats to validity of actual experiments as well as their strength.
C) randomized controlled experiments in economics are common.
D) external circumstances sometimes produce what appears to be randomization.
Answer: C) randomized controlled experiments in economics are common.
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A star basketball player signs a contract that newspaper reports indicate is worth $10 million. The player receives $2 million upon signing, and $2 million every year for four years. The contract is worth
A) less than $10 million since the present value of $2 million received one or more years from now is less than $2 million. B) more than $10 million since the present value of $2 million received one or more years from now is more than $2 million. C) $10 million as reported in the press. D) some amount around $10 million. To determine whether it is more or less than $10 million we need to know whether the interest the player can earn is more or less than the market rate of interest.
There are 20 residents in the village of Towneburg. The size of the village's annual fireworks display depends upon the number of shells that are fired off. Each resident's demand for fireworks is shown below. The total cost of the fireworks display is $1,000 plus $10 per shell.
If Towneburg's fireworks display has 20 shells, then the size of the display is:
A. optimal. B. smaller than optimal. C. larger than optimal. D. unaffordable.