Why do individuals decide to herd?
What will be an ideal response?
In general, there are two reasons why individuals may decide to herd. The first might simply be that they are afraid of being wrong—for this reason, they might not value their own instincts highly. Another reason is the assumption that if many people are making the same decision, they must be doing so for a reason. Herding creates an informational equilibrium in which people trust the wisdom of others and ignore their own information.
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Suppose we know that 10 Spanish Galleons sunk in the Atlantic ocean carrying approximately 50 tons of gold, but the exact location of these shipwrecks is unknown. Would this gold add to the world reserve?
A) Yes, we know it exists. B) No, we know it exists but we can't extract the gold. C) Yes, it's only a matter of time before the shipwrecks are discovered. D) No, there are no established property rights over the shipwreck so they cannot add to world reserves..
When the economy is getting the most from its scarce resources it is called: a. equity
b. efficiency. c. equality. d. equal shares.
Internal causes of an economy's business cycles include
a. housing demand b. war c. extreme weather d. innovation e. multiplier and accelerator interactions
Price controls can generate inequities
a. True b. False Indicate whether the statement is true or false