Question

Once a sports team signs a player to a guaranteed contract, the value of that contract becomes a nonmonetary opportunity cost.

a) True

b) False

- What is behavioral economics?

a) the study of situations in which people act in ways that are not economically rational

b) the study of how people make wealth-maximizing decisions

c) the study of how people behave in the face of scarcity

d) the study of how people make decisions at the margin

- The order of the letters along the rows of computer keyboards could be changed to allow users to type faster, but this would inconvenience the vast majority of people who learned to type with the current keyboard layout. The costs of switching to a new layout make this change unlikely. This is an example of

a) how consumers sometimes do not behave rationally.

b) path dependency.

c) how the elasticity of demand for typewriters has been affected by externalities.

d) how social influences overwhelm the substitution effect of a price change

Answer 1

Once a sports team signs a player to a guaranteed contract, the value of that contract becomes a nonmonetary opportunity cost. a) true

- What is behavioral economics? c) the study of how people behave in the face of scarcity (because they would choose the option that maximizes their individual satisfaction.)

- The order of the letters along the rows of computer keyboards could be changed to allow users to type faster, but this would inconvenience the vast majority of people who learned to type with the current keyboard layout. The costs of switching to a new layout make this change unlikely. This is an example of c) how the elasticity of demand for typewriters has been affected by externalities