Answer the following statement(s) true (T) or false (F)
1. Consumers use bounded rationality to take shortcuts in mental processing.
2. Rules of thumb tend to make people less confident.
3. Framing occurs when consumers treat money differently depending on where they got it.
4. Anchoring occurs when people rely heavily on the first piece of information offered when making a purchase.
5. The traditional consumer choice model predicts and explains most consumer behavior quite well most of the time.
1. False
2. False
3. False
4. True
5, True
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A firm's average total cost is $60, its average variable cost is $30, and its total fixed cost is $600. Its output is
A) 20 units. B) 30 units. C) 40 units. D) 50 units.
The above figure shows the marginal private benefit and marginal social cost of a college education. If society's external benefits from college graduates is $10,000 each, then
A) a subsidy of $10,000 per student paid to colleges will achieve efficiency. B) a tax of $10,000 per student imposed on the colleges will achieve efficiency. C) 10 million students per year is the efficient number students. D) None of the above answers are correct.
If you were a creditor you would prefer
A. deflation. B. disinflation. C. unanticipated inflation. D. anticipated inflation.
Johnny consumes only bread and milk. Suppose the quantity of milk is measured along the horizontal axis. If the price of milk rises, his budget constraint will
A. shift inward. B. rotate inward along the horizontal axis. C. rotate inward along the vertical axis. D. shift outward.