Answer the following statements true (T) or false (F)
1. Behavioral economics developed as a field of study that looks into how people make rational decisions based on self-interest.
2. One major point of disagreement between neoclassical economics and behavioral economics is the assumption of rationality.
3. Neoclassical economics and behavioral economics are similar in the assumption that people are capable of making accurate, sometimes complex, calculations with respect to their utility-maximizing decisions.
4. Neoclassical economics focuses on predicting behavior of economic agents, whereas behavioral economics focuses on the mental processes involved in decision-making.
5. Behavioral economics hopes to eventually fully replace the neoclassical economic model.
1. FALSE
2. TRUE
3. FALSE
4. TRUE
5. FALSE
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The slope of a country's production possibility frontier is equal to ________ and the optimal production point is located where the slope is equal to ________
Assume that output of good Y is measured on the vertical axis, output of good X is measured on the horizontal axis, MPL is the marginal product of labor with a subscript indicating which good, P is the price of a good, and w is the wage rate. A) -MPLY/MPLX; -PX/PY B) -PX/PY; -MPLY/MPLX; C) -PX/w; -PY/w D) -MPLY/w; -MPLF/w E) -MPLX/MPLY; -PX/PY
A basic model of a business firm in economics assumes that its management cannot improve on the technology that transforms inputs like labor and energy into output. This assumption helps them to understand the choice of:
a. input levels that minimize cost. b. output levels that minimize cost. c. output levels that maximize profits. d. input levels that maximize profits.