Principles of Microeconomics (MindTap Course List)
8th Edition
ISBN: 9781305971493
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Question
Chapter 22, Problem 10PA
(a):
To determine
Applying the concepts of rational theory.
(b):
To determine
Applying the concepts of asymmetric information.
(c):
To determine
Applying the concepts of behavioral economics.
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Peer pressure is an important influence on the behavior of youngsters. For instance, many preteens begin smoking because their friends pressure them into being “cool” by smoking. Using utility theory, how would you explain peer pressure? How would this compare with the explanations provided by behavioral economics and neuroeconomics?
Because gun violence is portrayed frequently on television and in movies, people mistakenly assign too high of a probability that they will fall victim to gun violence and too low of a probability to more likely but less publicized events. This phenomenon illustrates which one?
that events are poorly framed by the media.
that people suffer from hindsight bias.
the effect of the availability heuristic.
the self-serving bias at work.
All MegaCorp employees who stay on the job for more than three years are rewarded with a 10 percent pay increase and coverage under a private health insurance plan that MegaCorp pays for. Tina just passed three years as a MegaCorp employee and reacts to having health insurance by taking up several dangerous sports because now she knows that the insurance plan will pay for any injuries that she may sustain. This change in Tina’s behavior is known as: a. Defensive medicine. b. Asymmetric information. c. The moral hazard problem. d. The personal mandate.
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Principles of Microeconomics (MindTap Course List)
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- If behavior is governed by rational self interest why do people make charitable contributions of time and moneyarrow_forwardJulia is a 28- year-old nonsmoking , non-drinking female of normal weight Because of adverse selection in health insurance , (A) She will be charged less for her premiums than people who are higher risks ) B)She is less likely to buy health insurance than the average person, because policy premiums are based on expected medical expenditures of people who are less healthy than she is ( C) When she get health insurance , she will be less likely to take care of herself. ) D)She must get health insurance early in life, and is likely to lose health insurance if she smokes , drinks to excess, or gains weight. E) She is more likely than the average person to buy health insurance , because she is more likely to be offered it.arrow_forwardCould you please write your own words, not copy-paste or plagiarism issues Question: Discuss the concept of relativeness in the context of decision making and happiness from behavioral economicsarrow_forward
- The idea that ethical judgments are universal was advanced by: a. Kant & Hare b. Dostoyevsky & Kant c. Bentham & Dostoyevsky d. Dostoyevsky & Harearrow_forwardDescribe information imperfection and its role in market failure. Do consumers possess perfect acknowledge regarding their health status and the treatment options available to them?arrow_forwardEconomists assume that individuals:a. are rational and respond to incentivesb. prefer to live in a society that values fairness above all elsec. behave in unpredictable waysd. will never take action to help othersarrow_forward
- 7 A field of study that integrates psychology and economics is called motivational finances? Group of answer choices True Falsearrow_forwardmodels are important ways of simplifying information in economics. if you were to use models to present a coffee shop(such as Starbuck), what crucial features would you include?arrow_forwardIf you have health insurance that covers the cost of visiting the doctor, you may be less likely to take precautions against catching an illness that might require a doctor’s visit. This is called what? Group of answer choices Moral hazard Irrational behavior Adverse selection Price controlarrow_forward
- The difference between moral hazard and adverse selection is a. moral hazard has to do with unobservable characteristics of individuals b. moral hazard has to do with unobservable actions of individuals c. adverse selection is when individuals change their behaviors because of a contract d. adverse selection is when you choose the wrong answer on a testarrow_forwardIf the government wishes to make its population pursue a healthier lifestyle by creating a reduction in the demand for packets of cigarettes, examine and discuss how this can be implemented without government having to directly increase the price of a packet of cigarettes. Motivate your answer with a diagram.arrow_forwardWhat do you think of the ethics of using unconscious nudges to alter people’s behavior?arrow_forward
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