1.
What do neoclassical economics amd behavioral economics believe
about giving people options?
a. Both believe that people make better decisions when they
are given a greater set of options.
b. Behavioral evonomics focuses on providing more options;
neoclassical economics focuses on helping people make more rational
decisions with the options available.
c. Neoclassical economics focuses on providing more options;
behavioral economics focuses on helping people make better
decisions with the options available.
d. Both believe that people are better off with fewer options,
allowing them to spend more time calculating the benefits and costs
of each available option.
2. Which of the following sets of personal characteristics
best reflects what behavioural economits assume about how people
make decisions?
a. People are irrational, are prone to systematic errors, have
stable preferences, and care about fairness.
b. People are rational, adjust for errors, have stable
preferences, and easily resist temptation.
c. Peple care deeply about fairness, eagerlt and accurately
calculate ways to help otgers assess future and present options
very well, and resist temptations in their selflessness.
d. People have preferences that depend on context, avoid and
are bad at computation, often give in to temptation, and are often
selfless in their behavior.
3. According to economists, gift registeries, returning gifts
for cash refunds, and “recycling gifts”
a. are inefficient because the time spent in these activities
is never worth the benefit recipients receive from doing
them.
b. are equally efficient because the recipient gets exactly
what he wants.
c. are more efficient than if givers simply gave cash
gifts.
d. increase the efficiency of gift-giving because they allow
the recipient to consume goods that provide greater utility and
transfer away those goods that are less satisfying.
4. “ Essential” water is cheaper than “nonessential” diamonds
because:
a. new industrial uses for diamonds have been
discovered.
b. the supply of water is great relative to demand and the
supply of diamonds is small relative to demand.
c. although the total utility of diamonds is greater, their
marginal utility is small
d. the supply of diamonds is great relative to demand and the
supple of water is small relative to demand.