Suppose an economist tests the theory that when the price of leather increases, fewer pairs of shoes are produced. He observes more shoes being produced when the price of leather increases. At the same time, a new production technology allowed for more shoes to be produced in less time. He has

A. confused association and causation.
B. misunderstood the Ceteris paribus assumption.
C. used normative economics to answer a positive question.
D. built an untestable model.

Answer: B

Economics

You might also like to view...

2.2 "Supply-Side" Economics

What will be an ideal response?

Economics

Which of the following is a source of income inequality?

a. differences in ability b. differences in work intensity c. risk taking d. all of the above

Economics