Answer the following statements true (T) or false (F)
1. One major tenet of behavioral economics is that the human brain is prone to commit errors in perception.
2. The low-energy mental shortcuts or heuristics that the human brain commonly employs is one major reason for the systematic errors in decision-making that people make which is the focus of behavioral economics.
3. One consequence of the confirmation bias is that many people believe that they could "beat the (stock) market".
4. When people often blame "act of nature" or their colleagues for their plans going awry, they are illustrating the cognitive bias known as the overconfidence effect.
5.When people change their decision just because the context of the given information is changed, we call that the framing effect.
1. TRUE
2. TRUE
3. FALSE
4. FALSE
5. TRUE
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Suppose that there is an increase in expected future disposable income and simultaneously an increase in the expected profitability of investment
As a result, the equilibrium real interest rate ________ and the equilibrium quantity of loanable funds ________. A) rises; decreases B) falls; might increase, decrease, or not change C) rises; might increase, decrease, or not change D) rises; increases E) falls; increases
The patent system is intended to: a. prevent natural monopolies from unfairly exploiting their cost advantages. b. reward innovators by granting them temporary monopolies
c. spread information among firms as quickly and economically as possible. d. give small businesses a competitive edge over larger businesses.
The typical marginal cost curve faced by monopolists is U-shaped, whereas the average cost curve is upward sloping
a. True b. False Indicate whether the statement is true or false
You own a local sub shop in a college town. You primarily serve two groups of people: local residents (both students and other local residents) and visitors to your town. Devise a price discrimination strategy that will increase your revenues compared to a single-pricing strategy.
What will be an ideal response?