Answer the following statement true (T) or false (F)
1) Both neoclassical and behavioral economics believe that people are mostly rational in both
their decision making and their actions.
2) Behavioral economists believe that while people try to make rational decisions, they are
frequently subject to systematic errors.
3) Behavioral economics recognizes that people frequently make errors, but these errors
generally cancel out in such a way that neoclassical models are sufficient for predicting economic outcomes.
4) Neoclassical and behavioral economics are generally complementary.
1) F
2) T
3) F
4) T
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Production functions only apply to advanced economies
Indicate whether the statement is true or false
What of the following would most likely cause the movement from S 1 to S 2 ?
a. A country reduces its armed forces, releasing many people into the work force.
b. Rapidly spiraling medical costs force many seniors to return to work after they retire.
c. A small town collectively wins a mega-million lottery, and its citizens divide the prize
money.
d. People move into a state from a neighboring state that has high taxes and corrupt
officials.