Question 1

Which of the following do firms take advantage of to maintain high profits?

Accepted Answer

A)  There is relatively little government oversight in the marketplace. 
B)  People tend to gravitate toward the default option. 
C)  People are unaffected by default options. 
D)  The government only fines companies that have over $2 million in sales each year. 
A)  There is relatively little government oversight in the marketplace. 
B)  People tend to gravitate toward the default option. 
C)  People are unaffected by default options. 
D)  The government only fines companies that have over $2 million in sales each year.

Question 2

Behavioral economic policy:

Accepted Answer

A)  builds on traditional economic policy. 
B)  replaces traditional economic policy. 
C)  is based on laissez-faire principles. 
D)  supports pushes as opposed to nudges. 
A)  builds on traditional economic policy. 
B)  replaces traditional economic policy. 
C)  is based on laissez-faire principles. 
D)  supports pushes as opposed to nudges.

Question 3

Which type of price is an implicit price of an action whose value is measured in opportunity costs?

Accepted Answer

A)  Relative 
B)  Guaranteed 
C)  Equilibrium 
D)  Shadow 
A)  Relative 
B)  Guaranteed 
C)  Equilibrium 
D)  Shadow

Question 4

An employer's insurance program is set up so that employees have to opt out rather than opt in. This is an example of a(n):

Accepted Answer

A)  pricing nudge. 
B)  encouragement nudge. 
C)  information nudge. 
D)  advantageous default option nudge. 
A)  pricing nudge. 
B)  encouragement nudge. 
C)  information nudge. 
D)  advantageous default option nudge.

Question 5

Shadow prices are designed to take into account:

Accepted Answer

A)  the underground economy. 
B)  government intervention. 
C)  social and moral pressures. 
D)  market forces. 
A)  the underground economy. 
B)  government intervention. 
C)  social and moral pressures. 
D)  market forces.

Question 6

Which philosophy supports the idea that people should be free to make their own decisions?

Accepted Answer

A)  Communist 
B)  Libertarian 
C)  Fascist 
D)  Traditional 
A)  Communist 
B)  Libertarian 
C)  Fascist 
D)  Traditional

Question 7

Having more money and a bigger house than other people is the key to happiness. Which economic approach is most consistent with this idea?

Accepted Answer

A)  Behavioral 
B)  Keynesian 
C)  Traditional 
D)  Engineering 
A)  Behavioral 
B)  Keynesian 
C)  Traditional 
D)  Engineering

Question 8

Behavioral economic policy is likely to:

Accepted Answer

A)  suggest no government involvement. 
B)  be based on the assumption of rationality. 
C)  assume that the way choices are presented doesn't affect the decision made. 
D)  take into account people's predictably irrational behavior. 
A)  suggest no government involvement. 
B)  be based on the assumption of rationality. 
C)  assume that the way choices are presented doesn't affect the decision made. 
D)  take into account people's predictably irrational behavior.

Question 9

Which question is typically asked by economic engineers?

Accepted Answer

A)  Can we assume that people always behave rationally? 
B)  Can we increase the amount of mathematics in the model? 
C)  Can we design mechanisms to improve the coordination of people's actions? 
D)  Can we rely on the markets to distribute income fairly? 
A)  Can we assume that people always behave rationally? 
B)  Can we increase the amount of mathematics in the model? 
C)  Can we design mechanisms to improve the coordination of people's actions? 
D)  Can we rely on the markets to distribute income fairly?

Question 10

Shadow prices:

Accepted Answer

A)  are set by the government. 
B)  are illegal. 
C)  exist only in black markets. 
D)  are paid in terms of opportunity costs. 
A)  are set by the government. 
B)  are illegal. 
C)  exist only in black markets. 
D)  are paid in terms of opportunity costs.

Question 11

RECAP is a type of nudge that stands for:

Accepted Answer

A)  record, evaluate, and compare alternative prices. 
B)  replay, enumerate, and contrast active policies. 
C)  reevaluate, enlist, and compare attractive products. 
D)  restate, enjoy, and choose alternative products. 
A)  record, evaluate, and compare alternative prices. 
B)  replay, enumerate, and contrast active policies. 
C)  reevaluate, enlist, and compare attractive products. 
D)  restate, enjoy, and choose alternative products.

Question 12

Paternalism describes a situation in which:

Accepted Answer

A)  the government passes laws that require citizens to change their behavior. 
B)  people are likely to make bad decisions over and over. 
C)  there is no role for firms to influence people's behavior. 
D)  people are led to make better decisions (as judged by an outside decision maker). 
A)  the government passes laws that require citizens to change their behavior. 
B)  people are likely to make bad decisions over and over. 
C)  there is no role for firms to influence people's behavior. 
D)  people are led to make better decisions (as judged by an outside decision maker).

Question 13

The deliberate imposition of structure in an environment to induce people to make better choices (for example, etching flies in a urinal) is called:

Accepted Answer

A)  economic engineering. 
B)  choice architecture. 
C)  push policy. 
D)  enlightened self-interest. 
A)  economic engineering. 
B)  choice architecture. 
C)  push policy. 
D)  enlightened self-interest.

Question 14

If the RECAP policy was imposed on firms by the government, it would be considered a(n):

Accepted Answer

A)  shadow price. 
B)  advantageous default option nudge. 
C)  push. 
D)  purposeful behavior. 
A)  shadow price. 
B)  advantageous default option nudge. 
C)  push. 
D)  purposeful behavior.

Question 15

A professor's students are not getting good grades because of lack of studying. A behavioral economist would say that one reason the students are not studying is that:

Accepted Answer

A)  they prefer to hang out with friends and watch television and therefore are making an optimal choice. 
B)  the professor is not forcing the students to study for the tests. 
C)  the cost of studying (not being with friends) would have to be paid now, whereas the benefit (better grades) comes later. 
D)  we live in a society in which grades in college are not important. 
A)  they prefer to hang out with friends and watch television and therefore are making an optimal choice. 
B)  the professor is not forcing the students to study for the tests. 
C)  the cost of studying (not being with friends) would have to be paid now, whereas the benefit (better grades) comes later. 
D)  we live in a society in which grades in college are not important.

Question 16

Behavioral economists and traditional economists both believe that everything matters.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following is not a policy implication of the traditional model?

Accepted Answer

A)  For the most part, the government needs to stay out of people's way and let them trade. 
B)  There is a potential role for government if there are positive externalities. 
C)  The government should take moral and social incentives into account when considering intervention. 
D)  There is a potential role for government if there are negative externalities. 
A)  For the most part, the government needs to stay out of people's way and let them trade. 
B)  There is a potential role for government if there are positive externalities. 
C)  The government should take moral and social incentives into account when considering intervention. 
D)  There is a potential role for government if there are negative externalities.

Question 18

If the government were to regulate the way AT&T presents its phone plans, such a policy would be a:

Accepted Answer

A)  nudge. 
B)  push. 
C)  tax. 
D)  tariff. 
A)  nudge. 
B)  push. 
C)  tax. 
D)  tariff.

Question 19

Suppose an instructor takes off points for students coming late to class. He then finds that the number of late arrivals has risen. This could have happened because the:

Accepted Answer

A)  money price of late arrivals declined. 
B)  shadow price of late arrivals rose. 
C)  shadow price of late arrivals declined. 
D)  teacher did not fine the students monetarily for arriving late. 
A)  money price of late arrivals declined. 
B)  shadow price of late arrivals rose. 
C)  shadow price of late arrivals declined. 
D)  teacher did not fine the students monetarily for arriving late.

Question 20

What distinguishes nudge policies from push policies?

Accepted Answer

A)  Nudges are libertarian, whereas pushes are not. 
B)  Nudges affect choices, whereas pushes do not 
C)  Nudges affect incentives, whereas pushes do not. 
D)  Nudges are implemented by the government; pushes are implemented by firms. 
A)  Nudges are libertarian, whereas pushes are not. 
B)  Nudges affect choices, whereas pushes do not 
C)  Nudges affect incentives, whereas pushes do not. 
D)  Nudges are implemented by the government; pushes are implemented by firms.

Exam 22: Behavioral Economics and Modern Economic Policy

Which of the following do firms take advantage of to maintain high profits?

Behavioral economic policy:

Which type of price is an implicit price of an action whose value is measured in opportunity costs?

An employer's insurance program is set up so that employees have to opt out rather than opt in. This is an example of a(n):

Shadow prices are designed to take into account:

Which philosophy supports the idea that people should be free to make their own decisions?

Having more money and a bigger house than other people is the key to happiness. Which economic approach is most consistent with this idea?

Behavioral economic policy is likely to:

Which question is typically asked by economic engineers?

Shadow prices:

RECAP is a type of nudge that stands for:

Paternalism describes a situation in which:

The deliberate imposition of structure in an environment to induce people to make better choices (for example, etching flies in a urinal) is called:

If the RECAP policy was imposed on firms by the government, it would be considered a(n):

A professor's students are not getting good grades because of lack of studying. A behavioral economist would say that one reason the students are not studying is that:

Behavioral economists and traditional economists both believe that everything matters.

Which of the following is not a policy implication of the traditional model?

If the government were to regulate the way AT&T presents its phone plans, such a policy would be a:

Suppose an instructor takes off points for students coming late to class. He then finds that the number of late arrivals has risen. This could have happened because the:

What distinguishes nudge policies from push policies?

Economics and Economic Reasoning

The Production Possibility Model, Trade, and Globalization

Economic Institutions

Supply and Demand

Using Supply and Demand

Describing Supply and Demand: Elasticities

Taxation and Government Intervention

Market Failure Versus Government Failure

Comparative Advantage, Exchange Rates, and Globalization

International Trade Policy

Production and Cost Analysis I

Production and Cost Analysis II

Perfect Competition

Monopoly and Monopolistic Competition

Oligopoly and Antitrust Policy

Real-World Competition and Technology

Work and the Labor Market

Who Gets What the Distribution of Income

The Logic of Individual Choice: the Foundation of Supply and Demand

Game Theory, Strategic Decision Making, and Behavioral Economics

Thinking Like a Modern Economist

Microeconomic Policy, Economic Reasoning, and Beyond

Filters