Suppose an Economist Tests the Theory That When the Price

question 42

Multiple Choice

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.

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