Exam 10: Consumer Choice and Behavioral Economics

Results of the ultimatum game indicate that most people value fairness enough that they will refuse to participate in a transaction they consider unfair,even if they are worse off financially as a result.

Which of the following is an example of consumers being unrealistic about their future behavior?

Suppose you pre-ordered a non-refundable movie ticket to The Dark Knight Rises.On the day of the movie you decide that you would rather not go to the movie.According to economists,what is the rational thing to do?

The restriction that a consumer's total expenditure on goods and services purchased cannot exceed the income available is referred to as

The income effect of a price change refers to

The income effect of a decrease in the price of macaroni and cheese (assume this is an inferior good)results in

Some online penny auctions charge a fee,such as $1,for every bid placed.Why should these costs of $1 per bid be considered sunk costs? Would it be smart for someone who has "already invested $5 in bidding costs" to keep bidding to "protect his or her sunk investments"? Why or why not?

Table 10-5 Table 10-5 lists Jay's marginal utilities for burgers and Pepsi.Jay has $7 to spend on these two goods.The price of a burger is $2 and the price of a can of Pepsi is $1. -Refer to Table 10-5.What is Jay's optimal consumption bundle?

Which of the following statements about utility and preferences is false?

All consumption bundles along a given indifference curve are equally desirable.

Suppose the marginal utilities for the first three cans of soda are 100,80 and 60,respectively.The total utility received from consuming 2 cans is

The demand for a Giffen good slopes upward.

The only Giffen goods that have been identified so far in the real world are luxury goods.

Table 10-3 -Refer to Table 10-3.For steak and cheese and grilled chicken sandwiches,the table contains the values of the marginal utility (MU)and marginal utility per dollar (MU/P)for Mabel Jarvis.Mabel has $14 to spend on steak and cheese and grilled chicken sandwiches.Which of the following statements is false?

The additional utility that George receives from consuming one more slice of pizza is called

Economists have noted that businesses of a certain type tend to congregate geographically,attracting workers with skills in those fields.This,in turn,lures more firms seeking employees with those skills.Some examples include commercial banking,software development,and the automobile industry.What mechanism is at work here? Briefly explain how the mechanism works to the advantage of employers and employees.

Maurice Allais,Reinhard Selten and Vernon Smith all were awarded the Nobel Prize in Economics in part because

All but one of the following economists were awarded a Nobel prize for their contributions to experimental economics and their explorations of the influence fairness has on consumer decision-making.Which economist did not receive a Nobel Prize for this work?

If Joey Kobayashi experiences diminishing marginal utility from eating hot dogs then

Studies have shown that students who earn high grades in college will have earned much more over a 40 year period than students who receive low grades.Despite this,surveys show that many students fail to study enough hours outside of the classroom to earn high grades.Which of the following is the best explanation for this?