Question 1

Which of the following supermarket strategies to increase sales would be most consistent with a neoclassical economics (versus behavioral economics) approach?

Accepted Answer

A) holding posted prices constant but reducing package sizes 
B) providing discounts for buying in bulk 
C) placing the most frequently purchased items at the back of the store 
D) positioning high-profit kids cereals on the lower shelves of the cereal aisle 
A) holding posted prices constant but reducing package sizes 
B) providing discounts for buying in bulk 
C) placing the most frequently purchased items at the back of the store 
D) positioning high-profit kids cereals on the lower shelves of the cereal aisle

Question 2

Which of the following supermarket strategies to increase sales would be most consistent with a behavioral economics (versus neoclassical economics) approach?

Accepted Answer

A) distributing online coupons 
B) providing discounts for buying in bulk 
C) positioning frequently purchased items at the back of the store 
D) offering price matching with other stores 
A) distributing online coupons 
B) providing discounts for buying in bulk 
C) positioning frequently purchased items at the back of the store 
D) offering price matching with other stores

Question 3

Al regularly pays the full amount of taxes due, even though he could easily hide some of his income and reduce his tax burden, with no risk of getting caught.According to behavioral economics,

Accepted Answer

A) Al is not economically rational in his behavior. 
B) fairness and other moral considerations cause Al to act contrary to his pure self-interest. 
C) Al is more ethical than the majority of the population. 
D) heuristics are causing Al to act honorably, not a conscious or deliberative thought process. 
A) Al is not economically rational in his behavior. 
B) fairness and other moral considerations cause Al to act contrary to his pure self-interest. 
C) Al is more ethical than the majority of the population. 
D) heuristics are causing Al to act honorably, not a conscious or deliberative thought process.

Question 4

According to behavioral economists, the human brain frequently employs heuristics because

Accepted Answer

A) people have consciously trained their brains to do so. 
B) these shortcuts minimize errors in decision making. 
C) they produce more optimal outcomes than do rational calculations of benefits and costs. 
D) they save energy and time in decision making.Gradable: automatic 
A) people have consciously trained their brains to do so. 
B) these shortcuts minimize errors in decision making. 
C) they produce more optimal outcomes than do rational calculations of benefits and costs. 
D) they save energy and time in decision making.Gradable: automatic

Question 5

The many quirky decisions that people often make, which behavioral economics have found and analyzed, are so ingrained in the human psyche that there is nothing that policymakers can do about helping people make better choices for themselves.

Accepted Answer

A) True 
 B)False

Question 6

Time inconsistency refers to the phenomenon where your present self misjudges what your future self will do.

Accepted Answer

A) True 
 B)False

Question 7

The anchoring effect suggests that when people are made to think of large abstract numbers before they go shopping, many of them will subsequently be willing to pay higher prices for stuff.

Accepted Answer

A) True 
 B)False

Question 8

Heuristics generally help people to make decisions faster, but also to make more err ors.

Accepted Answer

A) True 
 B)False

Question 9

Neoclassical economics assumes the following as major motivators of decisions and actions, except

Accepted Answer

A) utility maximization. 
B) loss minimization. 
C) sense of fairness. 
D) self-interest. 
A) utility maximization. 
B) loss minimization. 
C) sense of fairness. 
D) self-interest.

Question 10

Which of the following do behavioral economists blame for why many households in sunny areas resist solar panels because they focus on the upfront installation costs instead of the larger long-run benefits that accrue from the solar panels?

Accepted Answer

A) framing effects 
B) anchoring 
C) myopia 
D) time Inconsistency 
A) framing effects 
B) anchoring 
C) myopia 
D) time Inconsistency

Question 11

According to behavioral economics, cognitive biases

Accepted Answer

A) create errors in decision making, but these errors are random and follow no particular pattern. 
B) occur but are not prevalent enough to distort the behavioral predictions of neoclassical economics. 
C) are misunderstandings or misperceptions that cause systematic error. 
D) are solely the result of faulty heuristics. 
A) create errors in decision making, but these errors are random and follow no particular pattern. 
B) occur but are not prevalent enough to distort the behavioral predictions of neoclassical economics. 
C) are misunderstandings or misperceptions that cause systematic error. 
D) are solely the result of faulty heuristics.

Question 12

Many economists believe that the neoclassical theories of human behavior and the insights being accumulated in behavioral economics are basically

Accepted Answer

A) opposed to one another. 
B) mutually exclusive to one another. 
C) complementary to one another. 
D) in agreement with one another. 
A) opposed to one another. 
B) mutually exclusive to one another. 
C) complementary to one another. 
D) in agreement with one another.

Question 13

(Consider This) According to the piece "Wannamaker's Lament,"

Accepted Answer

A) price tags are inefficient signaling mechanisms. 
B) money-back guarantees are costly to firms because they don't increase sales but do increase costs. 
C) most marketing efforts have little impact on sales. 
D) only 50 percent of new consumer products fail within the first year. 
A) price tags are inefficient signaling mechanisms. 
B) money-back guarantees are costly to firms because they don't increase sales but do increase costs. 
C) most marketing efforts have little impact on sales. 
D) only 50 percent of new consumer products fail within the first year.

Question 14

Sellers' sense of fairness is always consistent with the notion of rational self-interest of neoclassical economics.

Accepted Answer

A) True 
 B)False

Question 15

Carlos and Darla are playing the dictator game.Carlos is assigned the role of dictator and given $20 to split between the two of them.Based on previous experiments with this game, if Carlos is a typical player, behavioral economists would expect

Accepted Answer

A) Carlos to keep all of the money for himself. 
B) Carlos to give all of the money to Darla. 
C) Carlos to split the money evenly with Darla. 
D) Carlos to split the money, keeping a little more than half for himself. 
A) Carlos to keep all of the money for himself. 
B) Carlos to give all of the money to Darla. 
C) Carlos to split the money evenly with Darla. 
D) Carlos to split the money, keeping a little more than half for himself.

Question 16

The endowment effect describes when people value a good more when they own it than when they don't.

Accepted Answer

A) True 
 B)False

Question 17

The tendency of hard-core Republicans to believe that all of the economic developments under the Obama presidency have been detrimental to the nation illustrates the

Accepted Answer

A) confirmation bias. 
B) framing effect. 
C) overconfidence effect. 
D) availability heuristic. 
A) confirmation bias. 
B) framing effect. 
C) overconfidence effect. 
D) availability heuristic.

Question 18

When people convince themselves that they "knew all along" what was going to happen, when in fact their predictions wer e incorrect, they suffer from

Accepted Answer

A) overconfidence bias. 
B) self-serving bias. 
C) framing bias. 
D) hindsight bias. 
A) overconfidence bias. 
B) self-serving bias. 
C) framing bias. 
D) hindsight bias.

Question 19

Neoclassical economic analysis tends to disregard the following motivations in people's decisions and actions, except

Accepted Answer

A) charity. 
B) selflessness. 
C) self-interest. 
D) focus on the common good. 
A) charity. 
B) selflessness. 
C) self-interest. 
D) focus on the common good.

Question 20

Regarding people's preferences, behavioral economists observe that these preferences are

Accepted Answer

A) stable and not affected by context. 
B) fluid and easily influenced by framing. 
C) readily and accurately predictable. 
D) consistent from one period to the next. 
A) stable and not affected by context. 
B) fluid and easily influenced by framing. 
C) readily and accurately predictable. 
D) consistent from one period to the next.

Exam 8: Behavioral Economics

Which of the following supermarket strategies to increase sales would be most consistent with a neoclassical economics (versus behavioral economics) approach?

Which of the following supermarket strategies to increase sales would be most consistent with a behavioral economics (versus neoclassical economics) approach?

Al regularly pays the full amount of taxes due, even though he could easily hide some of his income and reduce his tax burden, with no risk of getting caught.According to behavioral economics,

According to behavioral economists, the human brain frequently employs heuristics because

The many quirky decisions that people often make, which behavioral economics have found and analyzed, are so ingrained in the human psyche that there is nothing that policymakers can do about helping people make better choices for themselves.

Time inconsistency refers to the phenomenon where your present self misjudges what your future self will do.

The anchoring effect suggests that when people are made to think of large abstract numbers before they go shopping, many of them will subsequently be willing to pay higher prices for stuff.

Heuristics generally help people to make decisions faster, but also to make more err ors.

Neoclassical economics assumes the following as major motivators of decisions and actions, except

Which of the following do behavioral economists blame for why many households in sunny areas resist solar panels because they focus on the upfront installation costs instead of the larger long-run benefits that accrue from the solar panels?

According to behavioral economics, cognitive biases

Many economists believe that the neoclassical theories of human behavior and the insights being accumulated in behavioral economics are basically

(Consider This) According to the piece "Wannamaker's Lament,"

Sellers' sense of fairness is always consistent with the notion of rational self-interest of neoclassical economics.

Carlos and Darla are playing the dictator game.Carlos is assigned the role of dictator and given $20 to split between the two of them.Based on previous experiments with this game, if Carlos is a typical player, behavioral economists would expect

The endowment effect describes when people value a good more when they own it than when they don't.

The tendency of hard-core Republicans to believe that all of the economic developments under the Obama presidency have been detrimental to the nation illustrates the

When people convince themselves that they "knew all along" what was going to happen, when in fact their predictions wer e incorrect, they suffer from

Neoclassical economic analysis tends to disregard the following motivations in people's decisions and actions, except

Regarding people's preferences, behavioral economists observe that these preferences are

Limits, Alternatives, and Choices

The Market System and the Circular Flow

Demand, Supply, and Market Equilibrium

Market Failures: Public Goods and Externalities

Governments Role and Government Failure

Elasticity

Utility Maximization

Businesses and the Costs of Production

Pure Competition in the Short Run

Pure Competition in the Long Run

Pure Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Technology, Rd, and Efficiency

The Demand for Resources

Wage Determination

Rent, Interest, and Profit

Natural Resource and Energy Economics

Public Finance: Expenditures and Taxes

Antitrust Policy and Regulation

Agriculture: Economics and Policy

Income Inequality, Poverty, and Discrimination

Health Care

Immigration

An Introduction to Macroeconomics

Measuring Domestic Output and National Income

Economic Growth

Business Cycles, Unemployment, and Inflation

Basic Macroeconomic Relationships

The Aggregate Expenditures Model

Aggregate Demand and Aggregate Supply

Fiscal Policy, Deficits, and Debt

Money, Banking, and Financial Institutions

Money Creation

Interest Rates and Monetary Policy

Financial Economics

Extending the Analysis of Aggregate Supply

Current Issues in Macro Theory and Policy

International Trade

The Balance of Payments, Exchange Rates, and Trade Deficits

The Economics of Developing Countries

Filters