Which of the following sets of personal characteristics best reflects what behavioral economists assume about how people make decisions?
A. People are irrational, are prone to systematic errors, have stable preferences, and care
about fairness.
B. People are rational, adjust for errors, have stable preferences, and easily resist temptation.
C. People care deeply about fairness, eagerly and accurately calculate ways to help others,
assess future and present options equally well, and resist temptations in their selflessness.
D. People have preferences that depend on context, avoid and are bad at computation, often
give in to temptation, and are often selfless in their behavior.
Answer: D
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In a centrally planned economy, the households and firms decide how economic resources will be allocated
Indicate whether the statement is true or false
Under monopolistic competition, firms produce ________ products and have long-run profits that are ________ (net of fixed costs).
A. differentiated; positive B. differentiated; close to zero C. homogenous; positive D. homogenous; close to zero
The regulation of natural monopolies is common in which of the following industries?
A. Electricity B. Oil C. Tobacco D. Alcohol
Public choice theory indicates competitive forces provide a politician with a strong incentive to offer voters a bundle of political goods that she believes
a. is best for the economic and political situations the country faces. b. will most likely clear the legislative process. c. will increase the welfare of society. d. will increase her chances of winning elections.