Which of the following best explains why the game of economics does not have a single goal?
A. Different people want different things out of life.
B. Some economic goals are not compatible with each other.
C. Economics is a game without winners or losers.
D. Most people do not know what economics is about.
Which of the following best explains why the game of economics does not have a single goal?
A. Different people want different things out of life.
B. Some economic goals are not compatible with each other.
C. Economics is a game without winners or losers.
D. Most people do not know what economics is about.
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Microeconomics Multiple Choice four-part question. Give a short explanation for each part of how or why the answer is correct.
Part A. |
After Rachene bought a magazine subscription, she does not enjoy the articles in the magazine. However, she dutifully reads the entire magazine every month because she had already paid for the subscription, and she feels the money will be wasted if she does not read it. What psychological factor associated with behavioral economics explains Rachene's behavior? |
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Part B. Bayram had the opportunity to choose between two investments. The first investment was described as having a 30% chance of succeeding, while the second investment was described as having a 70% chance of failing. Bayram opted for the first investment because he thought it sounded less risky than the second investment. The chances of succeeding and failing are the same for the two investments, however, which implies that Bayram is subject to:
a. overvaluing the present relative to the future.
b. a framing bias.
c.a sunk cost fallacy.
d. overconfidence.
Part C: Because they are so sure of their ability to pick winners, some people hang on to a stock even in the face of overwhelming evidence that its price is going to drop. These people are subject to:
a. overvaluing the present relative to the future.
b. a sunk cost fallacy.
c. overconfidence.
d, a framing bias.
Part D: Ryan stayed out late last night and is very tired. He plans to skip his 8 A.M. economics class, even though he knows his professor will cover material that will be on the final exam. Ryan is subject to:
a. overconfidence.
b. overvaluing the present relative to the future.
c. a sunk cost bias.
d. a framing bias.