You are participating in a reality show in which you and several other competitors have been taken to an unknown place and asked to find your way to a destination using a map . You were doing a good job until you reached a crossroad
Confused as to which way to take, you decided to take the road that most of your competitors chose. a) What is the term that is used to refer to such behavior? b) Why do people often behave in this way?
a) The term that is used to refer to such behavior is herding. Herding occurs when individuals conform to the decisions of others. In this case, you have chosen to follow your competitors and conform to their decisions.
b) In general, there are two reasons why individuals might decide to herd. The first may 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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Demand is elastic when a price ________ results in total revenue ________
A) rise, decreasing B) fall, decreasing C) rise, increasing D) fall; remaining constant
You can put your $100 in Bank A that pays 8% at the end of the year. You can also put your $100 in Bank B that pays 4% at the end of six months and then 4% again at the end of the year. You will keep your $100 and all interest in the bank
At the end of the year A) the total will be the same at both banks. B) the total at Bank A will be greater. C) the total at Bank B will be greater. D) the total could be larger at either bank.
Suppose the federal government wants to encourage businesses to increase investment spending. Which policy may be the most effective?
a. an increase in corporate income taxes b. an increase in real interest rates c. an increase in warnings of a coming recession d. an increase in tax deductions for investment spending
Some discriminatory hiring practices can be expected, even if markets are competitive, as a result of
a. unrestricted entry and exit in markets. b. lower costs of hiring. c. a perfectly elastic market demand. d. customer preferences.