Some economists are suggesting that we should use the insights of behavioral economics to:
A. Coerce people to make decisions towards improving their happiness
B. Design elaborate rules to restrict individuals' chances of hurting themselves
C. Nudge people toward choices that improve their welfare or that of others
D. Provide huge monetary incentives to people to move them to action
C. Nudge people toward choices that improve their welfare or that of others
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An inferior good exhibits
A) a negative income elasticity. B) a downward sloping Engel curve. C) a decline in the quantity demanded as income rises. D) All of the above.
The above figure shows the payoff matrix for two firms. A chemical firm must choose between a low level of production which yields one ton of pollution into a nearby lake and a high level of production which yields two tons of pollution into the
nearby lake. A private beach on the lake must decide whether to operate or not. Increased pollution reduces the number of people who wish to visit the beach. If the chemical firm owns the lake, and the beach owner must pay $10 to keep the chemical firm at just one ton of pollution, then A) the beach shuts down and the chemical firm produces one ton of pollution. B) the beach shuts down and the chemical firm produces two tons of pollution. C) the beach operates and the chemical firm produces one ton of pollution. D) the beach operates and the chemical firm produces two tons of pollution.
An industrious franchisee will
a. Always be outbid by lazy ones for the right to run a franchised restaurant b. Always outbid the lazy ones for the right to run a franchised restaurant c. Never outbid the lazy ones for the right to run a franchised restaurant d. None of the above
Which of the following did classical economists believe caused depressions and high unemployment??
a. Sticky product prices
b. Tax increases
c. Business expectations
d. Sticky wages
e. Sticky interest rates