Question 1

Which of the following is not an example of a fungible commodity?

Accepted Answer

A)  Diamonds
B)  Wheat
C)  Gold
D)  All of these are fungible commodities.E) B) and C)
F) A) and D)

Question 2

Economists make the general assumption that:

Accepted Answer

A)  people are rational,but their behavior doesn't always follow this assumption.
B)  people are irrational,but there are some correlations in behavior that have been proven.
C)  people are rational,but this doesn't really ever resemble reality.
D)  people are irrational,but this is too difficult to put into a model.E) B) and D)
F) B) and C)

Question 3

Sadie just bought a new karaoke machine to replace her old one.Her old one works perfectly fine and would sell on Craigslist for $50.The fact that Sadie would not pay $50 for it,yet continues to let it sit in her closet unused is explained by:

Accepted Answer

A)  the implicit cost of ownership.
B)  the cost of admitting you karaoke.
C)  ignored sunk costs.
D)  irrationally considering sunk costs.E) A) and B)
F) A) and C)

Question 4

Time inconsistency refers to a situation where:

Accepted Answer

A)  we change our minds about what we want simply because of the timing of the decision.
B)  we change our minds about what we want in response to gaining complete information.
C)  we typically choose the same thing,regardless of when the decision is being made.
D)  None of these statements is true.E) C) and D)
F) A) and B)

Question 5

Money is:

Accepted Answer

A)  the clearest example of something that is fungible.
B)  always recognized as fungible by individuals.
C)  more fungible in cash form versus online balances.
D)  All of these are true.E) None of the above
F) A) and D)

Question 6

The idea of time inconsistency:

Accepted Answer

A)  explains how it can be rational for someone to say they're going to eat a salad for dinner each night this week and end up eating pizza four out of five nights instead.
B)  explains how it can be rational for someone to pay more for something on their credit card than if they were to pay cash for the same thing.
C)  explains why people refuse to ignore only some sunk costs,while think at the margin other times.
D)  Time inconsistency doesn't explain any of these behaviors.E) A) and D)
F) B) and C)

Question 7

An example of a commitment device for Jane,who says she really wants to save more would be:

Accepted Answer

A)  an agreement that she give any new clothes,jewelry,or makeup purchases to her best friend,and Jane is not allowed to borrow them.
B)  a commitment to only buy things on sale.
C)  a decision to cook her own food and not order take-out or delivery food.
D)  All of these are examples of commitment devices.E) None of the above
F) B) and D)

Question 8

Kate receives two free passes to the waterpark for his birthday.She's not a huge fan of waterparks,and,therefore,would never buy such tickets for their face value of $90.Kate decides to use the tickets.This type of behavior is explained with the concept of:

Accepted Answer

A)  the implicit cost of ownership.
B)  the fungibility of money.
C)  ignoring sunk costs.
D)  None of these.E) B) and C)
F) A) and B)

Question 9

Economists believe that people who force themselves to always eat everything on their plate at a restaurant,regardless of how full they might feel,likely do so because:

Accepted Answer

A)  they must gain negative utility from insulting the chef.
B)  they undervalue the opportunity costs of their health and time involved with eating food they don't really want.
C)  they ignore the sunk cost involved.
D)  they undervalue the true benefit of eating too much.E) All of the above
F) None of the above

Question 10

When people change their minds about what they want simply because of the timing of the decision,economists refer to it as:

Accepted Answer

A)  time inconsistency.
B)  information overload paradox.
C)  cost-price inconsistency.
D)  time barriers to optimization.E) A) and C)
F) A) and D)

Question 11

The field of economics that draws on insights from psychology to expand models of individual decision making is called:

Accepted Answer

A)  behavioral economics.
B)  psychological economics.
C)  emotional economics.
D)  decision optimization economics.E) C) and D)
F) B) and C)

Question 12

Carla is deciding whether to go to the movies this afternoon or not.Carla likely will:

Accepted Answer

A)  have an easy time valuing the benefit of the movie.
B)  have a difficult time valuing her opportunity cost of the movie.
C)  undervalue her opportunity cost.
D)  All of these are true.E) A) and D)
F) A) and C)

Question 13

In economics,the concept of choosing one activity means:

Accepted Answer

A)  choosing not to take advantage of another opportunity.
B)  people always act rationally.
C)  people signal they only like that activity.
D)  that activity must be observable to be studied.E) C) and D)
F) A) and D)

Question 14

Someone saying they want to lose weight,but ordering dessert is an example of:

Accepted Answer

A)  rational decision making.
B)  rational behavior.
C)  irrational behavior.
D)  utility-maximizing behavior.E) C) and D)
F) None of the above

Question 15

The implicit cost of ownership:

Accepted Answer

A)  is a cognitive bias.
B)  is an unproven concept.
C)  is the monetary opportunity cost that is often overlooked.
D)  All of these are true.E) None of the above
F) B) and D)

Question 16

In order to get children to eat all the food they've served,regardless of their hunger,mothers have relied for decades on the argument that "there are starving children in China." Assuming the presence of hungry children on another continent does not affect the utility you derive from the food on your plate,if you choose to force down food based on this argument,you are:

Accepted Answer

A)  acting irrationally.
B)  acting rationally.
C)  caring more about starving children than your own well-being.
D)  doing your part in the fight against world hunger.E) All of the above
F) B) and C)

Question 17

Evan knows his GPA would skyrocket if he could break his horrible habit of procrastinating.An example of a commitment device Evan could use would be:

Accepted Answer

A)  to allow himself one hour of leisure for every half-hour of studying he does each day.
B)  to remove the TV from his dorm room.
C)  to pay a student to meet him each afternoon for 2 hours in the library to ensure he studies every day.
D)  All of these are commitment devices.E) None of the above
F) A) and B)

Question 18

When we say money is fungible,we mean a dollar from savings:

Accepted Answer

A)  is exactly the same as a dollar from your checking account.
B)  is earmarked for that purpose and can't be spent on everyday expenses like groceries.
C)  is not substitutable with any other dollar you have.
D)  is obviously worth more than the dollar you have in your pocket.E) A) and B)
F) A) and C)

Question 19

Howie just bought a new digital camera to replace his old one.His old one works perfectly fine and would sell on Craigslist for $100.The fact that Howie would not pay $100 for it,yet continues to let it sit in his closet unused is explained by:

Accepted Answer

A)  the implicit cost of ownership.
B)  the explicit cost of ownership.
C)  the explicit cost of sales.
D)  ignoring sunk costs.E) None of the above
F) A) and D)

Question 20

Jake brings his Xbox home over winter break and leaves it there,thinking he will study more in the spring without it around.Jake is:

Accepted Answer

A)  trying to compensate for the time-inconsistency of his desire to study more,but temptation to play video games instead.
B)  forcing his behavior to match economic theory.
C)  not acting rationally,since what he really wants is to play games all day.
D)  demonstrating that he has forgotten the fungibility of money.E) B) and C)
F) C) and D)

Exam 8: Behavioral Economics: A Closer Look at Decision Making

When people change their minds about what they want simply because of the timing of the decision,economists refer to it as:

Correct Answer
verified

Someone saying they want to lose weight,but ordering dessert is an example of:

Correct Answer
verified

When we say money is fungible,we mean a dollar from savings:

Correct Answer
verified

Money is:

Correct Answer
verified

Sadie just bought a new karaoke machine to replace her old one.Her old one works perfectly fine and would sell on Craigslist for $50.The fact that Sadie would not pay $50 for it,yet continues to let it sit in her closet unused is explained by:

Correct Answer
verified

Kate receives two free passes to the waterpark for his birthday.She's not a huge fan of waterparks,and,therefore,would never buy such tickets for their face value of $90.Kate decides to use the tickets.This type of behavior is explained with the concept of:

Correct Answer
verified

In economics,the concept of choosing one activity means:

Correct Answer
verified

The idea of time inconsistency:

Correct Answer
verified

Which of the following is not an example of a fungible commodity?

Correct Answer
verified

Economists believe that people who force themselves to always eat everything on their plate at a restaurant,regardless of how full they might feel,likely do so because:

Correct Answer
verified

An example of a commitment device for Jane,who says she really wants to save more would be:

Correct Answer
verified

The field of economics that draws on insights from psychology to expand models of individual decision making is called:

Correct Answer
verified

Evan knows his GPA would skyrocket if he could break his horrible habit of procrastinating.An example of a commitment device Evan could use would be:

Correct Answer
verified

The implicit cost of ownership:

Correct Answer
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Correct Answer
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Economists make the general assumption that:

Correct Answer
verified

Carla is deciding whether to go to the movies this afternoon or not.Carla likely will:

Correct Answer
verified

Time inconsistency refers to a situation where:

Correct Answer
verified

Jake brings his Xbox home over winter break and leaves it there,thinking he will study more in the spring without it around.Jake is:

Correct Answer
verified

Howie just bought a new digital camera to replace his old one.His old one works perfectly fine and would sell on Craigslist for $100.The fact that Howie would not pay $100 for it,yet continues to let it sit in his closet unused is explained by:

Correct Answer
verified

Exam 8: Behavioral Economics: A Closer Look at Decision Making

When people change their minds about what they want simply because of the timing of the decision,economists refer to it as:

Correct AnswerverifiedShow Answer

Someone saying they want to lose weight,but ordering dessert is an example of:

Correct AnswerverifiedShow Answer

When we say money is fungible,we mean a dollar from savings:

Correct AnswerverifiedShow Answer

Money is:

Correct AnswerverifiedShow Answer

Sadie just bought a new karaoke machine to replace her old one.Her old one works perfectly fine and would sell on Craigslist for $50.The fact that Sadie would not pay $50 for it,yet continues to let it sit in her closet unused is explained by:

Correct AnswerverifiedShow Answer

Kate receives two free passes to the waterpark for his birthday.She's not a huge fan of waterparks,and,therefore,would never buy such tickets for their face value of $90.Kate decides to use the tickets.This type of behavior is explained with the concept of:

Correct AnswerverifiedShow Answer

In economics,the concept of choosing one activity means:

Correct AnswerverifiedShow Answer

The idea of time inconsistency:

Correct AnswerverifiedShow Answer

Which of the following is not an example of a fungible commodity?

Correct AnswerverifiedShow Answer

Economists believe that people who force themselves to always eat everything on their plate at a restaurant,regardless of how full they might feel,likely do so because:

Correct AnswerverifiedShow Answer

An example of a commitment device for Jane,who says she really wants to save more would be:

Correct AnswerverifiedShow Answer

The field of economics that draws on insights from psychology to expand models of individual decision making is called:

Correct AnswerverifiedShow Answer

Evan knows his GPA would skyrocket if he could break his horrible habit of procrastinating.An example of a commitment device Evan could use would be:

Correct AnswerverifiedShow Answer

The implicit cost of ownership:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Economists make the general assumption that:

Correct AnswerverifiedShow Answer

Carla is deciding whether to go to the movies this afternoon or not.Carla likely will:

Correct AnswerverifiedShow Answer

Time inconsistency refers to a situation where:

Correct AnswerverifiedShow Answer

Jake brings his Xbox home over winter break and leaves it there,thinking he will study more in the spring without it around.Jake is:

Correct AnswerverifiedShow Answer

Howie just bought a new digital camera to replace his old one.His old one works perfectly fine and would sell on Craigslist for $100.The fact that Howie would not pay $100 for it,yet continues to let it sit in his closet unused is explained by:

Correct AnswerverifiedShow Answer

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