The Tragedy of the Commons occurs because
a. common resources are rival in consumption.
b. government does not efficiently allocate society's scarce resources.
c. people consider the value of resources in the future more than in the present.
d. markets do not account for the presence of property rights.
a
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A pervasive tradeoff in financial markets relates risk to expected returns. Which of the following statements reflects this relationship?
a. The higher the risk of an asset, the lower the expected return on the asset. b. There is usually no relationship between risk and return. c. The higher the risk of an asset, the higher the expected return on the asset. d. The return on an asset is normally positively related to the risk of comparable assets. e. The return on a risky asset cannot be compared with the return on a risk free asset.
Answer the following statements true (T) or false (F)
1. The "hedonic treadmill" of prospect theory suggests that if people's incomes rise and stay at the new higher level, then their feelings of satisfaction also rise and stay at the new higher level. 2. The anchoring effect suggests that when people are made to think of large abstract numbers before they go shopping, many of them will subsequently be willing to pay higher prices for stuff. 3. The endowment effect makes people value things less when they think of those things as their own as opposed to identical things that are not theirs - as in "grass is greener on the other side". 4. "Loss aversion" helps explain why people buy insurance policies with lower deductibles even though the policies are more expensive. 5. The status quo effect suggests that giving people more options is always good for them.