Hiring a sports celebrity to advertise a car dealership is a way of:
A. a waste of the dealership's money because celebrities aren't car experts.
B. statistically discriminates potential buyers who like sports.
C. screening those who aren't willing to pay as much for a car.
D. signaling the quality of the cars because it is costly to hire that celebrity.
Answer: D
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Over the past decade, the United States has had a current account deficit and capital account deficit
Indicate whether the statement is true or false
The difference between what consumers have to pay for a particular and what they are willing to pay is known as
A) consumer surplus. B) producer surplus. C) deadweight costs. D) deadweight surplus.
Keynes argued that when interest rates were high relative to some normal value, people would expect bond prices to ________, so the quantity of money demanded would ________
A) increase; increase B) increase; decrease C) decrease; decrease D) decrease; increase
After enjoying a perfectly delicious meal, Duane treats himself and orders a very expensive dessert. After one bite, Duane realizes he does not care for it at all. He chokes it down while thinking about the money he just wasted on it. Duane's decision to eat the entire dessert is an example of:
A. irrational behavior. B. a cognitive bias, because he is focused on the money spent on the dessert. C. emphasizing a sunk cost instead of weighing marginal costs and benefits. D. Duane's behavior exemplifies all of these.