Standard economic theory asserts that sunk costs are irrelevant in making economic decisions, yet studies conducted by behavioral economists reveal that sunk costs often affect economic decisions. Which of the following could explain this observation?
A) Even though sunk costs cannot be recovered, it has been incurred and therefore should be treated as part of the product's value.
B) People measure the value of a good in terms of its purchase price.
C) Sunk costs have a higher opportunity cost than costs that can be recovered.
D) If consumers maximize their utility, it makes sense to consider the full purchase price of a product in their consumption decisions.
B) People measure the value of a good in terms of its purchase price.
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Based on the figure above, in which quarter or quarters did a trough occur?
A) between 2013, 2nd quarter to 2014, 2nd quarter B) between 2012, 2nd quarter to 2013, 2nd quarter and also between 2014, 2nd quarter to the end of the figure C) in 2013, 2nd quarter D) in 2014, 2nd quarter E) There are no troughs illustrated in the figure.
Which of the following is a bank liability?
A) reserves B) consumer loans C) nontransaction deposits D) securities
Advocates of discretionary policy make which of the following criticisms of the economy’s “self-correcting” mechanism?
A. It is slow. B. It is not very reliable. C. It works only when supplemented by automatic stabilizers. D. All of these responses are correct. E. Options a and b only are correct.
We can measure the status of a national economy by looking at:
A. its total expenditures. B. its median income. C. We can look at either of these things to get the same measure. D. Neither of these is used to measure a nation's economic status.