Question 1

Behavioral economists believe that people should smoke as many cigarettes as they want.

Accepted Answer

A) True 
 B)False

Question 2

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 3

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 4

Grocery stores often place items people buy on impulse at the checkout lane. This is an example of:

Accepted Answer

A) choice architecture. 
B) government intervention. 
C) price fixing. 
D) irrational behavior. 
A) choice architecture. 
B) government intervention. 
C) price fixing. 
D) irrational behavior.

Question 5

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 6

A traditional economist probably would not want to give up the assumption of consumer sovereignty because it:

Accepted Answer

A) would violate Hume's dictum. 
B) is an empirically verifiable assumption. 
C) opens up a Pandora's box of problems and complexity. 
D) would violate the Schroeder principle. 
A) would violate Hume's dictum. 
B) is an empirically verifiable assumption. 
C) opens up a Pandora's box of problems and complexity. 
D) would violate the Schroeder principle.

Question 7

Shadow prices:

Accepted Answer

A) affect decisions just as money prices do. 
B) are not binding and so do not affect decisions. 
C) are illegal but still affect decisions. 
D) exist only when money prices are paid in the market. 
A) affect decisions just as money prices do. 
B) are not binding and so do not affect decisions. 
C) are illegal but still affect decisions. 
D) exist only when money prices are paid in the market.

Question 8

If an economist believes that choice architecture is important, he or she is more likely to be a:

Accepted Answer

A) traditional economist. 
B) Keynesian economist. 
C) behavioral economist. 
D) formal economist. 
A) traditional economist. 
B) Keynesian economist. 
C) behavioral economist. 
D) formal economist.

Question 9

When online seller Amazon sets the default mail option as two-day mailing instead of the free-shipping option, it is employing:

Accepted Answer

A) a RECAP. 
B) a tax. 
C) a push. 
D) a nudge. 
A) a RECAP. 
B) a tax. 
C) a push. 
D) a nudge.

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

Suppose a company wanted to try to improve the health of its workers as part of its health initiative program. When constructing a new building, it decides to put the elevators significantly farther than the stairs from the main entrance. This would be considered as an example of a(n):

Accepted Answer

A) push. 
B) nudge. 
C) irrational behavior. 
D) laissez-faire policy. 
A) push. 
B) nudge. 
C) irrational behavior. 
D) laissez-faire policy.

Question 12

Presenting options in a fashion that makes people more likely to make one choice over another is called:

Accepted Answer

A) the ACE model. 
B) natural experiments. 
C) choice architecture. 
D) traditional economics 
A) the ACE model. 
B) natural experiments. 
C) choice architecture. 
D) traditional economics

Question 13

Do nudges meet the criteria of libertarian paternalism?

Accepted Answer

For the most part,they do.Nudges do not

Question 14

Despite the fact that economists are just starting to incorporate nudges into their recommendations for economic policy,nudges are not a new discovery.Where have nudges been used in the past,and by whom?

Accepted Answer

Answers:
Firms have used nudges for a lo

Question 15

We call the situation in which the government makes a problem worse when it attempts to deal with it a(n):

Accepted Answer

A) incentive compatibility problem. 
B) deadweight loss. 
C) nudge. 
D) government failure. 
A) incentive compatibility problem. 
B) deadweight loss. 
C) nudge. 
D) government failure.

Question 16

What is the criterion of libertarian paternalism?

Accepted Answer

A policy that meets the criter

Question 17

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.

Question 18

Dating sites that match individuals such as Match.com and eHarmony.com are:

Accepted Answer

A) free-market pricing models. 
B) government-implemented models. 
C) coordinating mechanism designs. 
D) auction markets. 
A) free-market pricing models. 
B) government-implemented models. 
C) coordinating mechanism designs. 
D) auction markets.

Question 19

In the practical application of behavioral economic policy,who is most likely to decide on what nudges will be used? Who is most likely to implement those nudges?

Accepted Answer

The political process,or the g

Question 20

To resolve the problem of the negative effect of conspicuous consumption goods on society's welfare, an economist most likely would make the suggestion that:

Accepted Answer

A) conspicuous consumption goods should be taxed. 
B) conspicuous consumption goods should be subsidized. 
C) conspicuous consumption goods should be eliminated. 
D) nothing should be done because laissez faire is the best policy. 
A) conspicuous consumption goods should be taxed. 
B) conspicuous consumption goods should be subsidized. 
C) conspicuous consumption goods should be eliminated. 
D) nothing should be done because laissez faire is the best policy.

Exam 22: Behavioral Economics and Modern Economic Policy

Behavioral economists believe that people should smoke as many cigarettes as they want.

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:

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

Grocery stores often place items people buy on impulse at the checkout lane. This is an example of:

Paternalism describes a situation in which:

A traditional economist probably would not want to give up the assumption of consumer sovereignty because it:

Shadow prices:

If an economist believes that choice architecture is important, he or she is more likely to be a:

When online seller Amazon sets the default mail option as two-day mailing instead of the free-shipping option, it is employing:

Shadow prices:

Suppose a company wanted to try to improve the health of its workers as part of its health initiative program. When constructing a new building, it decides to put the elevators significantly farther than the stairs from the main entrance. This would be considered as an example of a(n):

Presenting options in a fashion that makes people more likely to make one choice over another is called:

Do nudges meet the criteria of libertarian paternalism?

Despite the fact that economists are just starting to incorporate nudges into their recommendations for economic policy,nudges are not a new discovery.Where have nudges been used in the past,and by whom?

We call the situation in which the government makes a problem worse when it attempts to deal with it a(n):

What is the criterion of libertarian paternalism?

What distinguishes nudge policies from push policies?

Dating sites that match individuals such as Match.com and eHarmony.com are:

In the practical application of behavioral economic policy,who is most likely to decide on what nudges will be used? Who is most likely to implement those nudges?

To resolve the problem of the negative effect of conspicuous consumption goods on society's welfare, an economist most likely would make the suggestion that:

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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