Answer the following statements true (T) or false (F)
1. Automatic payroll deductions help people to fight their time inconsistency problem with regards to saving.
2. Self-control problems, say among people on a diet, is caused by the cognitive bias known as time inconsistency.
3. Sellers' sense of fairness in pricing can sometimes lead them to pricing-decisions that do not maximize profits.
4. Sellers' sense of fairness is always consistent with the notion of rational self-interest of neoclassical economics.
5. The idea of "nudging" people into certain choices is one major contribution of behavioral economics to policy-making.
1. TRUE
2. TRUE
3. TRUE
4. FALSE
5. TRUE
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When a rent-seeking equilibrium is reached, the
A) economic profit is maximized. B) economic profit is eliminated by legislation. C) economic profit is eliminated. D) consumer surplus is greater than without rent seeking. E) consumer surplus is eliminated.
A college bookstore offers both new and used Physics 101 textbooks. Vicki pays $120 for a new copy, Darrel pays $85 for a used copy. Who made an economically efficient choice?
A) Vicki B) Darrel C) Both Vicki and Darrel D) Neither one of them—they could have found a better deal on the Internet.