Question 1

Economists believe that:

Accepted Answer

A)  every choice has a sunk cost.
B)  only some choices have an opportunity cost.
C)  every choice has an opportunity cost.
D)  sunk costs are a figment of one's imagination.E) A) and C)
F) C) and D)

Question 2

Applying the concept of time inconsistency, we can say that, in general, a person's future-oriented self:

Accepted Answer

A)  has the same objectives as a person's present-oriented self, but articulates those objectives differently.
B)  tends to choose healthier options, whereas a person's present-oriented self gives into temptation more easily.
C)  is less rational in decision-making, because that self rarely matches actual behavior.
D)  is more rational in decision-making, because its choices are generally healthier or more altruistic.E) None of the above
F) B) and C)

Question 3

An example of a sunk cost would be:
I. the cost of a movie ticket after you've started watching the movie.
II. the value of a lift ticket after you've started skiing.
III. the admission fee you paid to enter a national park.

Accepted Answer

A)  I only
B)  I and III only
C)  II only
D)  I, II, and IIIE) All of the above
F) B) and C)

Question 4

Scott and Tom are having dinner together at a new restaurant. They discover after ordering that the portions are huge, but the restaurant does not allow customers to take leftovers home so they eat until they both decide they are full. After this point, Scott forces himself to finish the rest of his food, even though he doesn't really want to, while Tom asks the waiter to remove his partially-full plate of food. How would an economist describe this behavior?

Accepted Answer

A)  Scott acted rationally, because the food would have otherwise been thrown away.
B)  Tom acted rationally, maximizing his utility.
C)  Both Tom and Scott acted rationally.
D)  Both Tom and Scott acted irrationally.E) A) and B)
F) A) and C)

Question 5

Claire bought a new TV, and the old one now sits in her basement untouched. If Claire were rational, what would she do with the old TV?

Accepted Answer

A)  Throw it away, because she doesn't really value it anymore
B)  Sell it for its market value, because that is the opportunity cost of having it sit in her basement
C)  Give it away, because it is worth more to someone else than Claire
D)  Either sell it for the value of her new TV or keep itE) All of the above
F) A) and B)

Question 6

Sophia would like to reduce the amount of time she spends on her phone, but she finds it difficult to stop her behavior. She decides to install an app that limits screen time. If she wants to continue using her phone when the time limit is up, she'll have to uninstall the app. This is an example of:

Accepted Answer

A)  the sunk cost fallacy.
B)  a commitment device.
C)  time fungibility.
D)  re-valuing time preferences.E) A) and C)
F) None of the above

Question 7

In economics, a person who is choosing one activity:

Accepted Answer

A)  chooses not to take advantage of another opportunity.
B)  is always acting rationally.
C)  is signaling that this activity alone brings enjoyment.
D)  chooses the activity that is most observable.E) A) and C)
F) B) and C)

Exam 8: Behavioral Economics: a Closer Look at Decision Making

Claire bought a new TV, and the old one now sits in her basement untouched. If Claire were rational, what would she do with the old TV?

Correct Answer
verified

An example of a sunk cost would be: I. the cost of a movie ticket after you've started watching the movie. II. the value of a lift ticket after you've started skiing. III. the admission fee you paid to enter a national park.

Correct Answer
verified

Correct Answer
verified

Sophia would like to reduce the amount of time she spends on her phone, but she finds it difficult to stop her behavior. She decides to install an app that limits screen time. If she wants to continue using her phone when the time limit is up, she'll have to uninstall the app. This is an example of:

Correct Answer
verified

In economics, a person who is choosing one activity:

Correct Answer
verified

Applying the concept of time inconsistency, we can say that, in general, a person's future-oriented self:

Correct Answer
verified

Economists believe that:

Correct Answer
verified

Exam 8: Behavioral Economics: a Closer Look at Decision Making

Claire bought a new TV, and the old one now sits in her basement untouched. If Claire were rational, what would she do with the old TV?

Correct AnswerverifiedShow Answer

An example of a sunk cost would be: I. the cost of a movie ticket after you've started watching the movie. II. the value of a lift ticket after you've started skiing. III. the admission fee you paid to enter a national park.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

In economics, a person who is choosing one activity:

Correct AnswerverifiedShow Answer

Applying the concept of time inconsistency, we can say that, in general, a person's future-oriented self:

Correct AnswerverifiedShow Answer

Economists believe that:

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified