Managerial Economics: A Problem Solving Approach
5th Edition
ISBN: 9781337106665
Author: Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher: Cengage Learning
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Chapter 21, Problem 2MC
To determine
Good incentive scheme.
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Who is most risk-averse?
a-an individual with slightly diminishing marginal utility.
b-all individuals are equally risk-averse.
c-an individual with rapidly diminishing marginal utility.
d-an individual who does not experience diminishing marginal utility.
Suppose a hot-dog vendor asks your advice for improving the sales. Based on the lecture videos, provide two behavioral suggestions. For each suggestion, explain the behavioral bias that the suggestion is based on. Explain each suggestion in detail and the reasons why it could increase the sales.
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Al Jazeez Electronics requires all employees who work as research specialists in its
electrical engineering department to have a minimum of a bachelor's degree in
electrical engineering (BSEE). This educational requirement would most likely be
stated in the job
for this position.
A. analysis
B. description
C. designation
D. specification
Chapter 21 Solutions
Managerial Economics: A Problem Solving Approach
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- Network externalities are present when the usefulness of a product A. increases with the number of consumers who use it. B. increases because there is no market failure. C. decreases because it is consumed publicly. D. increases with the endowment effect. E. increases because there are no switching costs. Click to select your answer and then click Check Answer.arrow_forwardWhy might a consumer want to purchase a risky product? A. A consumer might not be able to afford a less risky product B. A consumer might appreciate the risk and anticipate taking precautions C. A consumer would never want to knowingly purchase a risky product D. The product might have substitutes that are less risky E. (A) and (B)arrow_forwardHow is risk related to profit? a The lower the risk, the higher the profit. b Profit has an inverse relationship to risk. c Profit can be seen as a reward for taking risks. d High-risk ventures are more likely to be successful.arrow_forward
- Whether a certain criterion is determinant or not is independent of the situation in which a product is consumed. True False In the context of disposing of consumer refuse, recycling cuts down on garbage while providing raw materials for other new products. True False Which of the following is a fundamental emotion evoked by positive, anticipatory appraisals that signal uncertainty about a positive outcome? a. Hope b. Confusion c. Surprise d. Pride Which of the following best describes chronic, repetitive purchasing behaviors that are in response to negative events or feelings? a. Addictive consumption b. Impulsive purchasing c. Window shopping d. Compulsive buying Retaliatory revenge is when a consumer yells insults and makes a public scene in an effort to harm the business. True Falsearrow_forwardd. Use expected utility to make a recommended decision. e. Should the decision maker feel comfortable with the final decision recommended by the analysis?arrow_forwardYou ask someone about their preferences over the following pairs of lotteries: Lottery A Lottery B Payoff Probability Payoff Probability $200 25% $200 5% $100 45% $100 90% 30% $0 5% Lottery C Lottery D Payoff Probability Payoff Probability $200 20% $200 0% $100 0% $100 45% $0 80% $0 55% The individual says they prefer lotter A over lottery B, and lottery D over lottery C. Is this person using expected utility theory to evaluate these lotteries? How can you know for certain?arrow_forward
- The marginal utility of income for a risk-averse individual will be: Select one: a. diminishing. b. constant. c. increasing. d. unknown; the answer depends on the value of income.arrow_forwardTom is a retail manager who's training one of his seasoned salespeople on the features and benefits of a new product the company will be carrying. What training method is Tom using? A. Behavior modeling B. Role rotation C. In-basket technique D. On-the-job training Give justification for your answerarrow_forwardWhich of these is a guideline for making a decision? Guaranteed gain Marginal cost is less than marginal price. Marginal utility is greater than marginal cost. Opportunity cost is less than marginal cost.arrow_forward
- Which of the following is NOT axioms of utility? A. Completennes B. Interdependence C. Continuity D. Innovation 2. What is the study of how investors react to certain ways to diversify a portfolio? A. Behavioral Finance B. Traditional Finance C. Utility Theory D. Trend Theory 3. What do you call an act and ways that are consistent with how the business world views moral principles and values? A. Ethical Behavior B. Organizational Factors C. Issues and Concerns D. Organizational Behaviorarrow_forwardIn a repeated decision for which the present value of the benefits of cheating are greater than the present value of the costs of cheating, A. deciding to cheat is a value-maximizing decision. B.deciding to cheat is never a value-maximizing decision. C.None of the abovearrow_forwardDefine market value. How do you differentiate it fromintrinsic value?arrow_forward
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