Salary smoothing, automatic payroll deductions, and early withdrawal penalties are all examples of:
A. mechanisms imposed by companies to extract more from their workers and customers.
B. policies that do not fundamentally alter decisions because they do not change the benefits
or costs of an action.
C. precommitments.
D. hardwired heuristics.
Answer: C
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If, as price increases by 10 percent, total revenue decreases by 10 percent, demand is
A. elastic. B. unit elastic. C. inelastic. D. perfectly inelastic.
Which one of the following is a way to get out of a repeated Prisoner's Dilemma Nash Equilibrium?
a. Start by cooperating b. Start the game by punishing the rivals c. Start the game by cheating on the rivals d. All of the above
"If Tom had twice as much money, he could consume twice as much. If everyone had twice as much money, they could consume twice as much." This quote illustrates
a. the difference between positive and normative economics. b. the fallacy of composition. c. that association is not causation. d. the law of unintended consequences.
Keynesian theory became important when classical economic theory did not adequately explain a prolonged period of:
A. Inflation with low unemployment. B. Inflation with high unemployment. C. Deflation with low unemployment. D. Deflation with high unemployment.