When it comes to enacting policy changes, loss aversion often leads to status quo bias because:
A. the resistance from those who stand to lose from the policy often overwhelms the support from those who stand to gain.
B. people's estimates of their gains from the policy are often too large.
C. people's estimate of their losses from the policy are often too small.
D. the support from those who stand to gain from the policy often overwhelms the resistance from those who stand to lose.
Answer: A
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Suppose the federal government had budget surpluses of $80 billion in year 1 and $120 billion in year 2 but had budget deficits of $10 billion in year 3 and $40 billion in year 4. Also assume that it used its budget surpluses to pay down the public debt
At the end of these four years, the federal government's public debt would have: A. increased by $50 billion. B. increased by $150 billion. C. decreased by $200 billion. D. decreased by $150 billion.
Assume that a monopolist faces a linear demand curve and that it produces the output quantity where total revenue is maximized. At that output, the price elasticity of demand for the product is:
A. Greater or equal to one B. Less than one C. Equal to one D. Impossible to determine