According to proponents of behavioral economics, because every possible choice cannot be considered, an individual will tend to fall back on methods of making decisions that are simpler than trying to sort through every single possibility, known as
A. rational options.
B. irrational choices.
C. rules of thumb.
D. normative decisions.
Answer: C
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Consider the two economies of Lithasia and Barylia. Economic agents in Lithasia have coordination and incentive problems, while in Barylia social surplus is maximized
Which economic system does each of these economies most likely have? Explain your answer.
The type of good that is most likely to be subject to market failure is:
A. a public good. B. a private good. C. an uncommon resource. D. a factor of production
The "crowding out" effect refers to the:
A. increase in domestic investment by foreigners, leaving little investment choice for domestic investors. B. reduction in the interest rate caused by governments running a deficit. C. reduction in domestic investment caused by governments running a deficit. D. irrational exuberance of the market reducing the number of rational investments available.
Due to Pigou's "defective telescopic faculty," a market economy is inefficient in allocating resources between the present and the future
a. True b. False Indicate whether the statement is true or false