Two Economists Are Arguing About How to Approach a Problem

question 35

Multiple Choice

Two economists are arguing about how to approach a problem. The first economist says, "Look, I can see in the data that consumption rises when income rises. We need to build a model with an equation that relates the two." The second economist responds, "I can see that is the case, but we have to understand why that is true before we build any equations, and then we will see what the model says about the relationship between the two." What kind of economist is the second one likely to be?

• A) A traditional economist
• B) A behavioral economist
• C) An irrational economist
• D) An engineering economist

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Definitions:

Teenage Employment

The participation of individuals aged 13 to 19 in the workforce, whether part-time or full-time, often impacted by minimum age laws and schooling requirements.

Minimum Wage

The smallest amount of money that can be legally paid to employees by their employers.

Unemployment

The condition of someone of working age who is willing to work at prevailing wage rates but cannot find employment.

Binding Minimum Wage

A binding minimum wage is set at a level above the equilibrium wage in the labor market, effectively creating a floor on wages that employers must pay their workers.