Natural disasters often cause shortages of critical supplies. What outcomes would neoclassical and behavioral economics typically predict from these events?
A. Both would expect prices to rise significantly, whether from market forces or from self-
interest overwhelming any sense of compassion for others.
B. Both would expect sellers to keep prices unchanged, whether to keep customers happy
long-term or out of a sense of fairness.
C. Neoclassical economists would expect economic chaos and collapse, while behavioral
economists would expect everyone to act cooperatively.
D. Neoclassical economists would expect prices to rise dramatically as a natural result of the
greater scarcity, and behavioral economists would expect prices to increase less or not at
all as people try not to take advantage of the situation.
Answer: D
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Indicate whether the statement is true or false
Refer to the information above. What is the level of unintended inventory investment when income is 850?
A) -175 B) 175 C) -200 D) 200
To trust a potential cooperator until the first defection and then never cooperate thereafter is
a. a dominant strategy b. an irrational strategy c. a grim trigger strategy d. a non-cooperative finite game strategy e. a subgame imperfect strategy
What is the real value of money?
A. its face value B. its compounded earnings in banks C. the quantity of goods it can buy D. the ability of shop at market prices