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# 

Modules 1-10

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1.
When we look out at the world, we often only see macro level
phenomena – such as unemployment, segregation, and
inequality. Schelling’s segregation model teaches us that this
macro level phenomena need not align in an intuitive way with
what?

linear models
peer effects

## micro level behavior

Respuesta correcta
Schelling's model of segregation explains how you get
segregation even with tolerant preferences.

rational behavior

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2.
True or False:

## The standing ovation model teaches us that increased

variance in the quality of a show can increase the probability
of a standing ovation.

True

Respuesta correcta
[See 2.5, "The Standing Ovation Model" - under
"Segregation and Peer Effects"]

False

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3.
You read the following statement from an educational
reformer in a popular magazine:

“I’ve visited many schools and I always notice that the best
students hang out together. That’s why I tell parents that their
children should interact with other high achievers. In brief, I
tell them: if your child hangs out with smart kids, she’ll
become smart.”

## Sorting and Peer Effects

Respuesta correcta
The reformer has run into the Identification Problem.
Remember the "soda" vs. "pop" example from Section
2? In that case, it's safe to say that people adopt the
regional word, thus adjusting to be like the people
around them. In other cases - like political allegiance -
it may be the case that people move to be around
others who share similar views.

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4.
You run a company that makes seat cushions for airplanes. To
fit on the plane, the cushions must be between 20 and 23
inches wide. If you adopt the Six Sigma approach to
manufacturing the cushions, what should your goal be for the
standard deviation of seat width?

## Give a numerical answer using decimals to the hundredths

place. For example, your answer should look like 0.67 or 0.32
or 0.99.
0.25

Respuesta correcta
Hint: the mean of seat width should be the midpoint of
the range [20,23], which equals 21.5.

## [See 3.3, “Six Sigma"]

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5.
"Tit for Tat" is an example of which type of action?

Rule Based

Respuesta correcta
"Tit for Tat" is a fixed strategy.

Rational

Behavioral

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6.
Your friend Stephano claims that he can predict the sales at
your new ice cream store using a process that he calls
“temporal temperature intuition.” Your sales for the first four
days are \$1000, \$1100, \$1600, and \$1100. Stephano’s
predictions for those four days were \$1100, \$1500, \$1500, and
\$1300. Compute his R-squared in order to determine whether
his model is GOOD or NO GOOD.

GOOD

NO GOOD
Respuesta correcta
Step 1: Calculate the mean of the sales data.

## Step 3: Calculate the variation left over after

Stephano’s predictions.

## Step 5: Analyze the R-squared value to determine if the

model is GOOD or NO GOOD.

## [See 6.3, "Linear Models"]

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7.
Which of the following is linear?

## A graph of the function Y =X+1

Respuesta correcta
In a linear function, the dependent variable will
increase by a constant ratio.

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8.
Choose one of the options below to fill in the two blanks:

## A (1) _______ tip occurs when a gradual change in the value of a

variable leads to a large, i.e. discontinuous, jump in that same
variable in the future.

## A (2) _______ tip occurs when a gradual change in the value of

one variable leads to a discontinuous jump in some other
variable of interest.

## (2) Within Class

(1) Contextual

(2) Direct

(1) Direct

(2) Contextual

Respuesta correcta
See 7.5, "Classifying Tipping Points" - under "Tipping
Points"

## (2) Between Class

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9.
True or False: According to the Growth Model, continued
economic growth requires innovation.

True

Respuesta correcta
[See 8.3, "Basic Growth Model" under Economic
Growth]
False

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10.
You construct a Markov model of your exercise regimen. You
find that on days after exercising, you only exercise 75% of the
time. But on days following days that you have not exercised,
you always exercise. What percentage of days do you exercise
on average?

90%

80%

Respuesta correcta
Set up the Markov Transition Matrix. Let p denote the
probability that you exercise, and (1-p) denote the
probability that you do not.

## In equilibrium, the probability that you exercise, p, will

equal the probability that you exercise following a day
of exercise, 0.75p, plus the probability that you
exercise following a day that you didn’t, (1-p).

## [See 10.2, " Markov Equilibrium " - under "Markov

Processes"]

75%

60%

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11.
The No Free Lunch Problem leads to which of the following
conclusions? You may select more than one answer.

## We should beware of savants telling us fail safe

rules.

Respuesta incorrecta
The No Free Lunch Theorem formally states: All
algorithms that search the same number of points
with the goal of reaching the maximum value of a
function defined on a finite set perform exactly the
same when averaged over all possible functions.

##  Unless you know something about the problem

being solved, no algorithm or heuristic performs
better than any other.

Respuesta correcta
The No Free Lunch Theorem formally states: All
algorithms that search the same number of points
with the goal of reaching the maximum value of a
function defined on a finite set perform exactly the
same when averaged over all possible functions.

##  If we want to solve a wide range of problem types,

we should try to assemble a team with a diverse set
of heuristics, rather than a team of "experts" with
highly-specialized, uniform heuristics.

Respuesta correcta
The No Free Lunch Theorem formally states: All
algorithms that search the same number of points
with the goal of reaching the maximum value of a
function defined on a finite set perform exactly the
same when averaged over all possible functions.

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12.
Each member of a five person team has one unique idea for
how to approach a problem. If ideas can be applied
individually and in pairs to create approaches to the problem,
how many total approaches does the team have? (Hint: think
of this as recombination). Please input your answer as a whole
number with no punctuation.

20

Respuesta incorrecta
They have a certain number of individual ideas.

## Add these up.

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13.
Paul wants to decide for whom he will vote in an upcoming
municipal election. Paul is primarily concerned with one
attribute of the candidates: how liberal or conservative they
are. He makes a plot with "very liberal" on one end and "very
conservative" on the other end. He plots both candidates
along this line, and then draws a dot indicating where his ideal
candidate would fall on the line. Paul then decides for whom
to vote based the closeness of each candidate to his ideal
point along this line plot. This process is a simple use of which
concept from class?

Preference Aggregation

## Spatial Choice Model

Respuesta correcta
Try to visualize what Paul is doing - this may help you
decide which concept he's using.
Decision Trees

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14.
What are the three classes of outcomes - other than
equilibrium - that a model can produce?

## complex, periodic, chaotic

Respuesta correcta
We have discussed four classes of outcomes for
models in this course in multiple sections. Some of the
wrong answers in this question contain terms relevant
to certain models, but that are not the four major
possible outcomes.

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