Models, Data, and Positive versus Normative

Models are deliberate simplifications

The cycle that keeps models honest

Correlation is not causation

Positive versus normative

Consider four statements. (1) Rent ceilings reduce the supply of new housing. (2) Rent ceilings should be used to protect poor tenants. (3) A higher gasoline tax lowers gasoline consumption. (4) Gasoline taxes are unfair to rural drivers. Which pairing of labels is correct?

A city notices that neighborhoods with more streetlights have less street crime and concludes that adding lights caused the drop. What is the strongest reason to doubt the causal reading?

A simple weekly market model predicts the price of a bushel of apples as price = 3 + 2 × (rainy days that week), with the result in dollars. Using the model, compute the predicted price in dollars for a week with 10 rainy days and write the number.

Consider two statements. Statement A, a tax on sugary drinks raises their price. Statement B, sugary drinks should be taxed. Which classification is right?

Cities with more police per capita report more crime per capita. A council member concludes police cause crime. What is the strongest critique?

A market model predicts price equals 3 plus 2 times the number of rainy days in the week. Compute the predicted price in dollars for a week with 5 rainy days, and write the number.