John's friend Rosika won a major lottery jackpot. Seeing this, and despite the fact that millions don't win and the odds of winning are infinitesimal, John goes out and buys a bunch of lottery tickets despite struggling financially. John's
decision to buy the lottery tickets under these circumstances would best be explained by the:
A. hindsight bias.
B. self-serving bias.
C. confirmation bias.
D. availability heuristic.
Answer: D
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The long-run Phillips curve indicates that
A) potential GDP can never be achieved. B) there is no way to control the inflation rate in the long run. C) any inflation rate is possible at the natural unemployment rate. D) any unemployment rate is possible at the natural inflation rate. E) there is a tradeoff between the inflation rate and the unemployment rate in the long-run.
Steve owns a motorcycle valued at $5,000 and that is his only asset. There is a 5 percent chance that Steve will have an accident within a year. If he does have an accident, his motorcycle is worthless
Steve's utility of wealth curve is shown in the figure above. An insurance company agrees to pay Steve the full value of his motorcycle in case of an accident if he buys the company's insurance policy. The company's operating expenses are $500 per policy. What is the minimum premium that the insurance company will accept? A) $1,000 B) $2,000 C) $500 D) $1,500
Monique buys a new television for $795. She receives consumer surplus of $355 from the purchase. How much does Monique value her television?
A) $355 B) $440 C) $795 D) $1150
Consuming one more of a good increases its marginal-utility-to-price ratio, and consuming one less of the other good lowers its marginal-utility-to-price ratio
a. True b. False Indicate whether the statement is true or false