According to behavioral economics, cognitive biases:
A. create errors in decision making, but these errors are random and follow no particular
pattern.
B. occur but are not prevalent enough to distort the behavioral predictions of neoclassical
economics.
C. are misunderstandings or misperceptions that cause systematic error.
D. are solely the result of faulty heuristics.
Answer: C
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On a Phillips curve diagram, a decrease in the rate of inflation, other things being equal, is represented by a(n):
a. upward movement along the Phillips curve. b. downward movement along the Phillips curve. c. upward shift of the Phillips curve. d. downward shift of the Phillips curve.
There are few laws in economics. One is this: "As consumption of a good increases, the extra satisfaction received from consuming an additional unit of the good decreases.". This is known as the law of
a. demand b. diminishing total utility c. diminishing marginal utility d. diminishing marginal returns e. total utility