Behavioral economists believe in modifying the assumption that people are rational and follow their own self-interest.
Answer the following statement true (T) or false (F)
True
Behavioral economists believe in going beyond the traditional assumptions to solve many issues. They assume that people engage in purposeful behavior and enlightened self-interest.
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One group of people uses New York City subways only during rush hour to travel to and from work. Another group uses them only in midday for leisure activity. If New York City wants to increase transit fares with the smallest possible reduction in revenue, for which group should it increase the fare?
a. The rush-hour group because its demand for subway service is more elastic than that of the midday group. b. The rush-hour group because its demand for subway service is less elastic than that of the midday group. c. The midday group because its demand for subway service is more elastic than that of the rush-hour group. d. The midday group because its demand for subway service is less elastic than that of the rush-hour group. e. It doesn't matter because both groups have the same elasticity of demand.
Suppose hypothetically that the consumer price index (CPI) was 150 in Year 1 and was 180 in Year 2 . What would be the inflation rate for this period?
a. 12 percent. b. 16.7 percent. c. 20 percent. d. 30 percent.
A situation in which output decreases while prices increase is often referred to as:
A. inflation. B. negative economic growth. C. a recession. D. stagflation.
In the diagrams below, the subscript "1" refers to the initial position of the curve, while the subscript "2" refers to the final position after the curve shifts.
In which of the diagrams above would we see a shortage at the initial price after the indicated curve has shifted?
A. (1) and (4) B. (2) and (3) C. (1) and (3) D. (2) and (4)