When people react to (or perceive) identical situations differently in different contexts, we call that the:
A. Planning fallacy
B. Framing effect
C. Confirmation bias
D. Availability heuristic
B. Framing effect
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Consider a monopoly who posts an economic profit of $10,000,000. All else equal, this monopolist should expect
A) entry into its market, prices to fall, profits to fall. B) no entry into its market, prices to remain the same, profits to remain the same. C) exit from its market, prices to rise, profits to rise. D) entry into its market, the need to increase price, profits to remain the same.
The Pennsylvania Turnpike is a tolled freeway running through the state of Pennsylvania. Motorists must pay tolls at various points along the Turnpike based on the distance they traveled on the freeway. Suppose that despite the tolls, many motorists in the urban areas use the Turnpike causing traffic to slow during peak times. What type of good would the Turnpike be classified as in this case?
a. private good b. club good c. common resource d. public good
Suppose the central bank pursues an unexpectedly tight monetary policy. In the short-run the effects of this are shown by
a. moving to the left along the short-run Phillips curve. b. moving to the right along the short-run Phillips curve. c. shifting the short-run Phillips curve to the right. d. shifting the short-run Phillips curve to the left.
A decrease in demand is shown graphically by a shift of the demand curve to the _______.
Fill in the blank(s) with the appropriate word(s).