Question 1

What is a push policy?

Accepted Answer

A push policy is a government

Question 2

What are the two different kinds of nudges? Explain each and provide an example.

Accepted Answer

The first kind of nudge is an advantageo

Question 3

Traditional models incorporate social and moral incentives into price.

Accepted Answer

A) True 
 B)False

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

The opportunity cost concept takes into account:

Accepted Answer

A) only shadow prices. 
B) only money prices. 
C) both money and shadow prices. 
D) neither money prices nor shadow prices. 
A) only shadow prices. 
B) only money prices. 
C) both money and shadow prices. 
D) neither money prices nor shadow prices.

Question 6

What is an encouragement nudge? Give an example

Accepted Answer

An encouragement nudge is one that takes

Question 7

Mechanism designers start by building models and then look for problems that their models can solve.

Accepted Answer

A) True 
 B)False

Question 8

If everyone's utility function includes only conspicuous consumption goods:

Accepted Answer

A) the market will lead to the highest social welfare. 
B) the market will lead to higher social welfare than it otherwise would. 
C) we can say nothing about market and social welfare. 
D) the market will lead to lower social welfare than it otherwise would. 
A) the market will lead to the highest social welfare. 
B) the market will lead to higher social welfare than it otherwise would. 
C) we can say nothing about market and social welfare. 
D) the market will lead to lower social welfare than it otherwise would.

Question 9

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 10

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 11

A good that people buy only to make them look better than their neighbors is called a:

Accepted Answer

A) show-off good. 
B) relative position good. 
C) conspicuous consumption good. 
D) McGood. 
A) show-off good. 
B) relative position good. 
C) conspicuous consumption good. 
D) McGood.

Question 12

Restaurants will add high-price food items to the menu to lure diners to choose foods just below the high-price items. These items generally have the highest profit margin. This is an example of:

Accepted Answer

A) price discrimination. 
B) irrational behavior. 
C) enlightened self-interest. 
D) choice architecture. 
A) price discrimination. 
B) irrational behavior. 
C) enlightened self-interest. 
D) choice architecture.

Question 13

Economists agree that:

Accepted Answer

A) sometimes incentives facing a decision-maker will not achieve the desired result. 
B) incentives are likely to be inconsequential unless prices are involved. 
C) social and moral pressures cannot be modeled. 
D) markets are always the most efficient means of solving society's problems. 
A) sometimes incentives facing a decision-maker will not achieve the desired result. 
B) incentives are likely to be inconsequential unless prices are involved. 
C) social and moral pressures cannot be modeled. 
D) markets are always the most efficient means of solving society's problems.

Question 14

What is economic engineering?

Accepted Answer

Economic engineering is the fi

Question 15

Suppose the government passes laws that require restaurants to disclose the nutritional content of their menu items. This would be an example of a:

Accepted Answer

A) push. 
B) nudge. 
C) shadow price. 
D) flawed assumption. 
A) push. 
B) nudge. 
C) shadow price. 
D) flawed assumption.

Question 16

An auction is an example of a coordination mechanism.

Accepted Answer

A) True 
 B)False

Question 17

Economic engineering:

Accepted Answer

A) focuses exclusively on social factors that affect incentives. 
B) is the process of designing markets and coordinating mechanisms to achieve a specific goal. 
C) simulates virtual economies on the computer and lets coordination mechanisms emerge. 
D) is a scientific approach to economics in contrast to the heuristic supply/demand model. 
A) focuses exclusively on social factors that affect incentives. 
B) is the process of designing markets and coordinating mechanisms to achieve a specific goal. 
C) simulates virtual economies on the computer and lets coordination mechanisms emerge. 
D) is a scientific approach to economics in contrast to the heuristic supply/demand model.

Question 18

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 19

Behavioral economists say that desires are affected by one's context;what do traditionalists say?

Accepted Answer

Traditional economis

Question 20

In which of the following decisions would a case for a nudge policy be most difficult to make?

Accepted Answer

A) When benefits and costs are separated over time 
B) When the choice is complicated and has many dimensions 
C) When the choice is made infrequently 
D) When it is difficult to tell what is best for the person making the choice 
A) When benefits and costs are separated over time 
B) When the choice is complicated and has many dimensions 
C) When the choice is made infrequently 
D) When it is difficult to tell what is best for the person making the choice

Exam 22: Behavioral Economics and Modern Economic Policy

What is a push policy?

What are the two different kinds of nudges? Explain each and provide an example.

Traditional models incorporate social and moral incentives into price.

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):

The opportunity cost concept takes into account:

What is an encouragement nudge? Give an example

Mechanism designers start by building models and then look for problems that their models can solve.

If everyone's utility function includes only conspicuous consumption goods:

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

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:

A good that people buy only to make them look better than their neighbors is called a:

Restaurants will add high-price food items to the menu to lure diners to choose foods just below the high-price items. These items generally have the highest profit margin. This is an example of:

Economists agree that:

What is economic engineering?

Suppose the government passes laws that require restaurants to disclose the nutritional content of their menu items. This would be an example of a:

An auction is an example of a coordination mechanism.

Economic engineering:

RECAP is a type of nudge that stands for:

Behavioral economists say that desires are affected by one's context;what do traditionalists say?

In which of the following decisions would a case for a nudge policy be most difficult to make?

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

Economic Growth, Business Cycles, and Unemployment

Measuring and Describing the Aggregate Economy

The Keynesian Short-Run Policy Model: Demand-Side Policies

The Classical Long-Run Policy Model: Growth and Supply-Side Policies

The Financial Sector and the Economy

Monetary Policy

Financial Crises, Panics, and Unconventional Monetary Policy

Deficits and Debt: the Austerity Debate

The Fiscal Policy Dilemma

Jobs and Unemployment

Inflation, Deflation, and Macro Policy

International Financial Policy

Macro Policy in a Global Setting

Structural Stagnation and Globalization

Macro Policy in Developing Countries

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