Someone Notices That Sunspot Activity Is High Just Prior to Recessions

question 57

Multiple Choice

Someone notices that sunspot activity is high just prior to recessions and concludes that sunspots cause recessions. This person 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.

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Definitions:

Concentration Ratios

Measures that indicate the degree of concentration in an industry, often used to assess competition levels.

Market Shares

The portion of a market controlled by a particular company or product, often expressed as a percentage of total sales in the industry.

Competitive

Relating to or characterized by competition; having the ability or resources to compete successfully with others.

Imperfectly Competitive

A market structure characterized by few sellers, differentiated products, and barriers to entry, which does not meet the criteria of perfect competition.