Which of the following best explains the difference between neoclassical economics and behavioral economics?
A. Neoclassical economics believes that government should play a minimal role in the
economy, while behavioral economics calls for a more active role for government.
B. Neoclassical economics assumes that people are rational in their decision making, while
behavioral economics believes people make systematic errors.
C. There is no real difference; behavioral economics just studies more intently how the
rational decision-making process works.
D. Neoclassical economics no longer offers valid explanations for economic outcomes, while
behavioral economics does.
Answer: B
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In the Cournot model
A) market price is unaffected by the actions of any individual firm. B) firms do not have to worry about the strategies of the other firms. C) firms' profits are independent. D) firms' profits are interdependent.
Which of the following calculations is necessary to determine whether a regulation should be implemented?
a. Marginal cost-marginal revenue calculations b. Cost effectiveness calculations c. Total cost-total revenue calculations d. Cost minimization calculations e. Cost-benefit calculations