Question 1

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 2

System 1 is the part of the brain that carefully weighs the benefits and costs when making decisions.

Accepted Answer

A) True 
 B)False

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

Why,according to behavioral economics,would supermarkets place gum,candy,and other small convenience items near the cash registers?

Accepted Answer

A)  Those are the shelving locations that minimize costs. 
B)  Stores try to make frequently purchased items quicker and easier for consumers to access. 
C)  Smaller items tend to fall through shopping cart holes,so stores reduce that problem for consumers by having smaller items at the checkout stands. 
D)  Many of these are small items that people will buy on an impulse. 
A)  Those are the shelving locations that minimize costs. 
B)  Stores try to make frequently purchased items quicker and easier for consumers to access. 
C)  Smaller items tend to fall through shopping cart holes,so stores reduce that problem for consumers by having smaller items at the checkout stands. 
D)  Many of these are small items that people will buy on an impulse.

Question 5

Which of the following statements is most accurate about human brain modularity?

Accepted Answer

A)  System 1 uses heuristics,system 2 is more calculating,and both are equally important in decision making. 
B)  Both systems regularly use both heuristics and conscious calculations,and both are equally important in decision making. 
C)  System 1 uses heuristics,system 2 is more calculating,and system 2 regularly overcomes system 1's heuristics to make decisions. 
D)  System 1 uses heuristics,system 2 is more calculating,and most decisions are made by system 1. 
A)  System 1 uses heuristics,system 2 is more calculating,and both are equally important in decision making. 
B)  Both systems regularly use both heuristics and conscious calculations,and both are equally important in decision making. 
C)  System 1 uses heuristics,system 2 is more calculating,and system 2 regularly overcomes system 1's heuristics to make decisions. 
D)  System 1 uses heuristics,system 2 is more calculating,and most decisions are made by system 1.

Question 6

The threat of rejection is part of what makes the invisible hand a valid metaphor for how the market system works.

Accepted Answer

A) True 
 B)False

Question 7

Isolating transactions from the overall set of consumption options is known as anchoring.

Accepted Answer

A) True 
 B)False

Question 8

Eric tries to eat more healthfully by eliminating cookies,donuts,and similar snacks from his diet.Every day at work,however,co-workers bring in these treats and Eric succumbs to temptation.Which of the following concepts would behavioral economists use to explain Eric's self-control problem?

Accepted Answer

A)  Time inconsistency. 
B)  Availability heuristic. 
C)  Self-serving bias. 
D)  System 2 processes dominating decision making. 
A)  Time inconsistency. 
B)  Availability heuristic. 
C)  Self-serving bias. 
D)  System 2 processes dominating decision making.

Question 9

Bucky and Satchel are offered identical jobs,each paying $80,000 per year.According to behavioral economics:

Accepted Answer

A)  they should feel equally good about the job offer. 
B)  how each will feel about the job offer will depend on their current positions and incomes. 
C)  if Bucky's current income is $60,000 per year,and Satchel's is $70,000 per year,we would expect Bucky to receive twice as much additional utility from taking the job as Satchel would. 
D)  if the jobs will not change their income,they are more likely to switch jobs than remain with the status quo. 
A)  they should feel equally good about the job offer. 
B)  how each will feel about the job offer will depend on their current positions and incomes. 
C)  if Bucky's current income is $60,000 per year,and Satchel's is $70,000 per year,we would expect Bucky to receive twice as much additional utility from taking the job as Satchel would. 
D)  if the jobs will not change their income,they are more likely to switch jobs than remain with the status quo.

Question 10

The threat of rejection in market transactions:

Accepted Answer

A)  leads to higher prices as sellers try to cover possible losses. 
B)  leads to better products and lower prices for consumers. 
C)  leads to less cooperation between buyers and sellers. 
D)  does all of these. 
A)  leads to higher prices as sellers try to cover possible losses. 
B)  leads to better products and lower prices for consumers. 
C)  leads to less cooperation between buyers and sellers. 
D)  does all of these.

Question 11

In anonymous surveys,on average people rate themselves as "above average" with regard to characteristics such as intelligence,perceptiveness,and driving ability.According to behavioral economics,this contradictory result would most likely be caused by the:

Accepted Answer

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

Question 12

Behavioral economics demonstrates that the threat of rejection makes people less likely to engage in transactions.

Accepted Answer

A) True 
 B)False

Question 13

Why do credit card companies typically require small minimum payment amounts on their customers' monthly credit card statements?

Accepted Answer

A)  Credit card companies are concerned that their customers will be put in financial distress if required to make higher payments. 
B)  Credit card companies want to promote faster repayment,and customers will be encouraged to pay more each month if they're able to pay well beyond the minimum. 
C)  Credit card companies want to increase profits by promoting slower repayment,and actual customer payments will be anchored by the smaller payment requirements. 
D)  Credit card companies actually charge the highest minimum payment they are allowed by law to charge. 
A)  Credit card companies are concerned that their customers will be put in financial distress if required to make higher payments. 
B)  Credit card companies want to promote faster repayment,and customers will be encouraged to pay more each month if they're able to pay well beyond the minimum. 
C)  Credit card companies want to increase profits by promoting slower repayment,and actual customer payments will be anchored by the smaller payment requirements. 
D)  Credit card companies actually charge the highest minimum payment they are allowed by law to charge.

According to behavioral economics,cognitive biases:

System 1 is the part of the brain that carefully weighs the benefits and costs when making decisions.

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:

Why,according to behavioral economics,would supermarkets place gum,candy,and other small convenience items near the cash registers?

Which of the following statements is most accurate about human brain modularity?

The threat of rejection is part of what makes the invisible hand a valid metaphor for how the market system works.

Isolating transactions from the overall set of consumption options is known as anchoring.

Eric tries to eat more healthfully by eliminating cookies,donuts,and similar snacks from his diet.Every day at work,however,co-workers bring in these treats and Eric succumbs to temptation.Which of the following concepts would behavioral economists use to explain Eric's self-control problem?

Bucky and Satchel are offered identical jobs,each paying $80,000 per year.According to behavioral economics:

The threat of rejection in market transactions:

In anonymous surveys,on average people rate themselves as "above average" with regard to characteristics such as intelligence,perceptiveness,and driving ability.According to behavioral economics,this contradictory result would most likely be caused by the:

Behavioral economics demonstrates that the threat of rejection makes people less likely to engage in transactions.

Why do credit card companies typically require small minimum payment amounts on their customers' monthly credit card statements?

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 Cost of Production

Pure Competition in the Short Run

Pure Competition in the Long Run

Pure Monopoly

Monopolistic Competition and Oligopoly

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

Filters

Exam 8: Behavioral Economics

According to behavioral economics,cognitive biases:

System 1 is the part of the brain that carefully weighs the benefits and costs when making decisions.

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:

Why,according to behavioral economics,would supermarkets place gum,candy,and other small convenience items near the cash registers?

Which of the following statements is most accurate about human brain modularity?

The threat of rejection is part of what makes the invisible hand a valid metaphor for how the market system works.

Isolating transactions from the overall set of consumption options is known as anchoring.

Eric tries to eat more healthfully by eliminating cookies,donuts,and similar snacks from his diet.Every day at work,however,co-workers bring in these treats and Eric succumbs to temptation.Which of the following concepts would behavioral economists use to explain Eric's self-control problem?

Bucky and Satchel are offered identical jobs,each paying $80,000 per year.According to behavioral economics:

The threat of rejection in market transactions:

In anonymous surveys,on average people rate themselves as "above average" with regard to characteristics such as intelligence,perceptiveness,and driving ability.According to behavioral economics,this contradictory result would most likely be caused by the:

Behavioral economics demonstrates that the threat of rejection makes people less likely to engage in transactions.

Why do credit card companies typically require small minimum payment amounts on their customers' monthly credit card statements?

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 Cost of Production

Pure Competition in the Short Run

Pure Competition in the Long Run

Pure Monopoly

Monopolistic Competition and Oligopoly

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

Filters