Behavioral economics extends traditional economic models by
A) including insights from psychology and human cognition models.
B) modeling behavior rather than prices.
C) admitting that individuals are irrational.
D) admitting that incentives are very important.
A
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A reduction in the price charged for luncheon specials by a downtown cafeteria will
A) affect the demand (curve) for that cafeteria's luncheons if its competitors react. B) have no effect on the demand for lunch at other downtown restaurants. C) increase the cafeteria's gross revenue from lunch business. D) increase the cafeteria's net revenue from lunch business if the demand is elastic. E) increase the cafeteria's net revenue from lunch business if the demand is inelastic.
Over the range of output, a firm’s marginal revenue initially increases and then decreases.
Answer the following statement true (T) or false (F)
The first, second, and third workers employed by a firm add 24, 18, and 9 units to total product respectively. Therefore, we can conclude that:
A. marginal product of the third worker is 9. B. the third worker has to work with poorer-quality tools and raw materials. C. the firm will not want to hire more than three workers. D. the first worker puts forth more effort than the second and third workers.
How can one profit through arbitrage if the dollar per euro exchange rate in London is $2 per pound while in New York is $1.95 per pound?
A. Buy pounds in London and sell them in New York B. Buy dollars in London and sell pounds in New York C. Buy dollars in New York and sell them in London D. Buy pounds in New York and sell them in London