IC #2 (1-30-09) GRADING KEY

Q #1. If the equation of a line is y = 20 – 4x, a 2 unit increase in x will have this marginal impact (unit change) on y:

a. +20 (-3)

b. -20 (-3)

c. -4 (-2)

d. -8* (correct, -0)

e. +8 (-1)

Q #2. The problem solving ‘caution’ of holding all other factors constant in order to be able to measure the marginal impact of one factor is this concept:

a. post hoc fallacy (-2)

b. laissez faire (-3)

c. ceteris paribus* (correct, -0)

d. efficient markets (-3)

e. normative economics (-3)