Utrecht School of Economics

Exam Multidisciplinary Economics ECB1EMNW & ECB1HMDE

8 November 2016, 11am – 1 pm

Instructions & remarks

1. This examination (including the current front page) consists of 2 pages in total.
2. Enter your name and student registration number on each answer sheet, in the
indicated place.
3. Write your answer only on the answer sheets, no more than one page for each answer.
Keep your answers concise, but write full sentences .
4. Answers that are not legible will not be graded!
5. Have your photo identity ready to be checked.
6. Cell phones or other communication devices are not admitted during the exam.
7. It is not allowed to have any notes, memos etc. relating to the material to be studied for
the exam within arm’s reach (i.e. on your table, in an open bag, etc.).
8. Toileting is only permitted on request and can only be after 11:30am.
9. You are only allowed the scrap paper that is handed out by the examiners or one of the
other invigilators (upon request).
10. The maximum number of points that can be scored for this exam is 80, 10 for each
question. The results of this examination will constitute 60% of your final result.
11. The results of the exam, will be published on Blackboard on Tuesday, 22 November,
2016.
12. Date, time, and location to inspect your exam are: Tuesday, 29 November, from 3:15 to 4
PM. In due time the venue will be announced on Blackboard.
13. A photocopy of your exam can be requested at the student desk of the Utrecht School of
Economics. Four weeks after publication of the results of this exam, the original exam is
available, when a declaration is signed, stating that no appeal has been made or will be
made.
14. Making an appeal against the result of this exam is possible in writing until four weeks
after the official announcement of the results. The appeal has to be directed to the
“College van Beroep voor Examens”, Heidelberglaan 8, 3584 CS Utrecht.

 2015 Utrecht University School of Economics

All rights reserved. No part of this examination may be reproduced or transmitted in any form by any electronic
or mechanical means (including photocopying, recording or information storage and retrieval) without the prior
written permission of the Utrecht University School of Economics.

1
Question 1
Paul Samuelson called economics the Queen of the Social Sciences. Give two arguments why
economics could be called in this way. [max 5 points for each argument]

Question 2
Models can be representations of economic systems or phenomena. These representations can
be approximations or caricatures of those systems or phenomena.
a) What is the difference between an approximation and a caricature? [6 points]
b) Give an example of each, and clarify your examples. [max 2 points for each example]

Question 3
What are the differences between economics and econometrics? Describe two differences.
[max 5 points for each description]

Question 4
Gross Domestic Product (GDP) is defined as the market value of all final goods and services
produced within a country in a given period of time. Explain why GDP is not a good measure
of welfare. [max 10 points]

Question 5
The discipline of Law and Economics particularly focuses on two key concepts, namely
‘incentives’ and ‘efficiency’. From the perspective of Law and Economics, explain both
concepts, ‘incentives’ and ‘efficiency’, in relation to the imposition of legal rules. [max. 5
points for each explanation]

Question 6
According to Frank Dobbin, most economic sociologists use the inductive method, whereas
most neoclassical economists use the deductive method.
a) What is the difference in scientific approach between induction and deduction in
general? [max. 4 points]
b) Give an example of how neoclassical economists argue in a deductive way and an
example of how economic sociologists argue in an inductive way. [max. 3 points for
each example]

Question 7
Experimental economists should set up their experiments in laboratories in such a way that
the results are externally valid.
a) What is meant by ‘external validity’? Give a clear description. [max 6 points]
b) Give an example of how an experimenter researching the provision of public goods
(PGE) in a lab setting could try to increase the external validity of the experiment.
[max 4 points]

Question 8
Daniel Kahneman stressed the importance of the psychological concept of framing for
economic decisions.
a) What is meant by ‘framing’? [max 6 points]
b) How did Kahneman (and other similar minded scholars) use framing to study the
validity of the assumption of rationality? [max 4 points]