How does the sample size affect the validity of an empirical argument? When is it acceptable to use only one example to disprove a statement?
What will be an ideal response?
The size of the sample used to test the argument can affect the results. A small sample may bias the results of a study. A key strength of economic analysis is the amount of data used. Using a large number of observations strengthens the force of an empirical argument. For example, if you collect information on consumption from 20,000 people as opposed to 20 people, you are likely to get a more representative result. A single example can be used to contradict a statement. For example, a single black swan can disprove the statement that all swans are white.
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Events that arise spontaneously and unpredictably, often as a result of changes in consumer and business confidence regarding the economy, are called
A) supply shocks. B) demand shocks. C) recessions. D) externalities.
In the figure above, the marginal cost of producing a computer
A) increases as more computers are produced. B) stays the same as more computers are produced. C) decreases as more computers are produced. D) is the same as the marginal cost of producing a television set.