This chapter discussed natural and randomized experiments. How ...

[BRWH]

This chapter discussed natural and randomized experiments. How does a natural experiment differ from a randomized one? Which one is likely to yield more accurate results?
 
  What will be an ideal response?

Question 2

Mary makes 10 pies and 20 cakes a day and her opportunity cost of pro-ducing a cake is 2 pies. Tim makes 20 pies and 10 cakes a day and his op-portunity cost of producing a cake is 4 pies.
 
  If Mary and Tim specialize in the good in which they have a comparative advantage ______. A. Mary produces pies
  B. Tim produces pies and cakes
  C. Mary produces cakes while Tim produces pies
  D. Tim produces cakes while Mary produces pies

[recede]

Answer to Question 1

A natural experiment is an empirical study in which some process  out of the control of the experimenter  has assigned subjects to control and test groups in a random or nearly random way. The process of randomization involves the assignment of subjects by chance, rather than by choice, to a test group or control group. The test group and the control group are treated identically, except along a single dimension that is intentionally varied across the two groups. The impact of this variation is the focus of the experiment. Both types of experiments can yield accurate results. Natural experiments are likely to be used when there are budget or time constraints to conducting a randomized experiment.

Answer to Question 2

C Answer C is correct because Mary has the lower opportunity cost of making a cake.