Deck 4: Behavioural Economics

Question 1

Traditional economic behaviour assumes:

A) Rational behaviour
B) Irrational behaviour
C) Profit minimising behaviour
D) Utility

Answer 1

A

Question 2

Rational behaviour assumes businesses want to maximise:

A) Utility
B) Sales
C) Profit
D) Output

Answer 2

C

Question 3

Rational behaviour assumes consumers want to maximise:

A) profit
B) sales
C) utility
D) output

Answer 3

C

Question 4

Profit is maximised when:

A) Marginal revenue equals marginal cost
B) Marginal revenue is greater than marginal cost
C) Marginal revenue is less than marginal cost
D) Marginal revenue equals zero

Question 5

Framing refers to:

A) How choices are ordered when making a decision
B) Giving a false option
C) Giving too many options
D) Giving only one choice

Question 6

Anchoring occurs when:

A) Consumers have never made this decision before
B) Consumers change their original decision
C) Consumers won't change their mind.
D) Consumers have a reference point when making a decision

Question 7

Heuristics are:

A) The barriers to changing a decision
B) Negative outcomes from a decision
C) Short cuts used when making decisions
D) The non-financial effects of a decision

Question 8

Salience shows that information that stands out is more likely to affect our decision making.

Question 9

People may spend more on credit cards than with cash because of mental accounting.

Question 10

A tendency to keep things as they are is known as "status …….."

Question 11

If a business buys 10 units of materials at £5 each on credit. Cashflow is -£50 and costs are £50.

Question 12

Total contribution measures total revenue minus fixed costs

Question 13

The marginal product of labour is measured by:

A) Total output/number of employees
B) Number of employees/output
C) Change in output/change in employees
D) Change in employees/change in output

Question 14

If marginal output is positive but falling:

A) Total output is decreasing at decreasing rate
B) Total output is decreasing at an increasing rate
C) Total output is increasing at an increasing rate
D) Total output is increasing at decreasing rate

Question 15

The average fixed costs:

A) is constant
B) increases with output
C) decreases with output
D) decreases when marginal cost increases