By studying the effects of choice architecture, we can:
A. blend the ideas of psychology with core economic beliefs.
B. expand the simplifying assumption that people always make the choices that are best for themselves.
C. open the possibility that we can no longer tell if someone is making a mistake or choosing something that is maximizing his utility.
D. All of these statements are true.
Answer: D
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A perfectly competitive firm's marginal revenue exceeds its marginal cost at its current output. To increase its profit, the firm will
A) lower its price. B) raise its price. C) decrease its output. D) increase its output.
Cartels are typically subject to cheating by their members because
A) if the other firms stick to the agreement, a firm can increase its profits by cutting its price. B) barriers to entry do not exist so new entrants will join. C) the U.S. Justice Department will punish any cartel agreement before the cartel has had a chance to operate. D) product differentiation allows the firms in the cartel to cheat.
What is produced and consumed in the economy is determined jointly by
A) government policies and the economy's productive capacity. B) the economy's productive capacity and the preferences of consumers. C) the preferences of consumers and the behavior of business managers. D) the behavior of business managers and government policies.
An increase in the price of laptop memory chips causes the price for laptops _____________ and the quantity supplied for laptops ____________
a. Increase; increase b. Increase; decrease c. Decrease; increase d. Decrease, decrease