Suppose an Economist Tests the Theory That When the Price

question 119

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) has confused association and causation.
• B) cannot test his theory because his observations violate the ceteris paribus assumption.
• C) used normative economics to answer a positive question.
• D) built a model with too many variables .

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Definitions:

Security Interest

A legal claim or lien on collateral that secures the performance of an obligation, typically the repayment of a debt.

Attachment

A legal process by which a court of law, at the request of a creditor, designates specific property owned by the debtor to be transferred to the creditor or sold for the benefit of the creditor.

Documents Of Title

Legal documents that provide proof of ownership over goods or property, crucial in the transfer of rights from one party to another.

Dock Warrants

Documents that certify the ownership of goods stored in a warehouse or dock, enabling the holder to take possession or control of the goods.