ECNS 201 PRINTOUT
8th Edition
ISBN: 9781337096553
Author: Mankiw
Publisher: CENGAGE L
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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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Could you please write your own words, not copy-paste or plagiarism issues
Question:
Discuss the differences between social and market norms(behavioral economics) and what happens when these norms collide. How can an understanding of these two norms help businesses?
When consumers were given the opportunity to select a package of ground beef labeled “75% lean” or a package of ground beef labeled “25% fat,” most consumers chose “75% lean.” Why? What concept from the chapter does this illustrate?
The reason is that consumers are swayed by cheap talk. Cheap talk is the concept.
The reason is that consumers are much more likely to choose the alternative framed as the positive option. This is called a framing effect.
The reason is that consumers infer the value of a product from positive advertising. This is called inference induction.
The reason is that consumers respond better to higher numbers. They feel they are getting more because 75 is greater than 25. The concept is the endowment effect.
Behavioral economics incorporates insights from which other field of study? A. Psychology B. Political science C. Sociology D. Anthropology
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