Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

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.E) C) and D)
F) None of the above

Question 3

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.E) B) and D)
F) B) and C)

Question 4

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.E) A) and D)
F) None of the above

Question 5

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.E) B) and C)
F) C) and D)

Question 6

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.E) B) and D)
F) B) and C)

Question 7

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.E) A) and B)
F) A) and C)

Question 8

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.E) A) and B)
F) A) and C)

Question 9

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 10

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

Accepted Answer

A) True 
 B)False

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.E) C) and D)
F) All of the above

Question 12

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 13

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.E) C) and D)
F) B) and C)

Exam 8: Behavioral Economics

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:

Correct Answer
verified

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:

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

According to behavioral economics,cognitive biases:

Correct Answer
verified

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

Correct Answer
verified

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?

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

The threat of rejection in market transactions:

Correct Answer
verified

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

Correct Answer
verified

Exam 8: Behavioral Economics

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:

Correct AnswerverifiedShow Answer

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:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

According to behavioral economics,cognitive biases:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The threat of rejection in market transactions:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct Answer
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