In developing prospect theory, which of the following did behavioral economists not discover about people's reaction to goods and bads?
A. People feel equivalent losses and gains in equal measure, supporting the assumption that
consumers behave rationally.
B. People are generally loss averse, feeling losses more intensely than gains.
C. People judge good and bad outcomes relative to the status quo.
D. People experience both diminishing marginal utility from gains and diminishing marginal
disutility from losses.
Answer: A
You might also like to view...
Refer to the scenario above. Which of the following is true in this case?
A) Firm A's dominant strategy is to choose Strategy X. B) Firm B's dominant strategy is to choose Strategy Y. C) Firm A chooses Strategy X if Firm B chooses Strategy Y. D) Firm A chooses Strategy Y if Firm B chooses Strategy Y.
Economic regulation of business is justified if, by intervening, government can
a. improve the allocation of resources in society b. create economic rents for special interest groups c. reduce output and increase prices for an industry d. increase tax revenue from the regulated industry e. force firms to increase their costs of production