A company has designed an alarm clock that "runs and hides" after going off, forcing the person to get up and find the alarm clock if he or she wants to shut off the alarm. According to behavioral economists:
A. it is unlikely to alter people's tendency to shut off the alarm and ultimately oversleep.
B. the alarm clock keeps people from hitting the snooze button and taking advantage of the
availability heuristic.
C. the alarm clock serves as a precommitment device, helping the user to stick to the
originally planned wake-up time.
D. overconfidence effects will discourage use of such devices.
Answer: C
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Refer to Figure 28-9. A follower of the new classical macroeconomics would argue that a contractionary monetary policy to lower inflation after a supply shock, like that pursued by Volcker in 1979, would result in a movement from
A) C to D to A. B) A to B. C) C to A. D) A to C. E) A to D to C.
Suppose a company expects prices in general to rise by 5%, but the price of its product rises by 2%. How will the company respond to the price change?
A) It will increase production since it's getting a higher price for the product. B) It will increase production more slowly since it's price is rising more slowly than average. C) It will reduce production since it perceives a relative decline in the demand for its product. D) It will stop production and shut down until prices rise more quickly.