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People Respond to Incentives quiz #2

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  • Mobile users’ greater impatience means that
    They respond quickly to incentives and may switch to alternatives faster.
  • A recurring theme in economics is that people
    Respond to incentives to make themselves better off.
  • Based on the lesson, how are individuals and economies similar?
    Both respond to incentives and adjust behavior to improve outcomes.
  • Which statement best describes incentives?
    Incentives motivate people to change their behavior.
  • According to Adam Smith, what drives businesses to make their prices attractive to consumers?
    The pursuit of profit and competition.
  • In the market, actions known as incentives affect
    The decisions and actions of buyers and sellers.
  • Based on the lesson, how are individuals and economies similar?
    Both seek to exploit opportunities created by incentives.
  • A rational decision maker takes an action only if the
    Expected benefit exceeds the expected cost.
  • Satisficing is the tendency of
    Choosing an option that is good enough rather than the optimal one.
  • Rational rule for sellers
    Sell more if the marginal benefit exceeds the marginal cost.
  • The insurance mechanism is based on an assumption that people
    Respond to incentives to reduce risk and protect themselves.
  • Rational rule for employers
    Hire more workers if the marginal benefit of hiring exceeds the marginal cost.
  • Managers who use the method of optimizing to make their decisions will attempt to choose
    The option that maximizes their benefit given available incentives.