Econ Macro (book Only)
6th Edition
ISBN: 9781337408745
Author: William A. McEachern
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Question
Chapter 1, Problem 5P
To determine
If the informed decisions can prove to be costly while making a good decision or to have an uninformed decision in order to save cost.
Concept Introduction:
Rational decision makers need to make an informed decision as they are dependent on theresources from which they would be able to acquire information which can eventually benefit in terms of gaining the additional information which would include exceeding the additional costs.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
It is often costly to obtain the information necessary to make good decisions. Yet, your own interests can best be served by rationally weighing all options available to you. This requires informed decision making. Does this mean that making uninformed decisions is irrational? How do you determine how much information is the right amount?
Behavioral economics suggests that people are more likely to take risks when given choices that are framed in terms of ________ rather than _______. (Fill in both blanks, separated by a comma.)
Rational choice theory is an economic principle that assumes individuals always make prudent and logical decisions to maximize net benefit. True or false
Chapter 1 Solutions
Econ Macro (book Only)
Knowledge Booster
Similar questions
- Purposeful behavior means that: people are selfish in their decision-making. people weigh costs and benefits to make decisions. people are immune from emotions affecting their decisions. decision-makers do not make mistakes when weighing costs and benefits.arrow_forwardWhich of the following about emotional influence on decision making is true? People generally make rational decisions that maximize desirable outcomes in the absence of emotions Only emotions that are relevant to the decision at hand have any influence on that decision People tend to overestimate their predicted negative emotions resulting from a decision's outcomes People are equally angry about unfair offers in the ultimatum game from computers and from other human playersarrow_forwardWhat type of bias relies too heavily on one piece of information in making a final decision? A. Availability Heuristic Bias B. Bandwagon Effect C. Anchoring Biasarrow_forward
- Why might it be difficult for a buyer and seller to agree on a price when imperfect information exists?arrow_forwardA personal economic decision that was driven by a behavioral bias rather than by pure rational behavior.arrow_forwardEconomic analysis is limited in its ability to forecast precise choices of a given individual because:arrow_forward
- Would you say that a sacrifice represents the cost of a particular decision?arrow_forwardBecause 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.arrow_forwardProspect theory is based on behavioral economists' understanding of how people what? react to good things (or gains) and bad (or losses). make predictions about their future income. search for job prospects or business prospects. behave under stressful conditions.arrow_forward
- Which of the following are examples of common behavioral errors in decision making (multiple correct answers; check all that apply). A. Always paying more than true willingness to pay. B. Letting unrecoverable sunk costs influence ongoing decisions for when such costs have no bearing on benefits and costs going forward. C. Making different decisions when an identical problem is framed in two different ways, especially when one is framed in terms of gains and the other in terms of losses. D. Always saving too little. E. Generally spending too little on high-quality, high-priced items. F. Settling on a default alternative in the face of a difficult or complex decision G. Considering the average cost and average benefit, instead of the marginal cost and marginal benefit, When choosing whether a little more or less should be bought or produced.arrow_forwardWe learned that we can use choice between a gamble over someone's best and worst outcomes and getting an outcome of interest (like getting pizza) for certain as a way to assign numeric values to utility (on a scale of 0 to 1). Using this method, if you are indifferent between the following: A gamble that has a 0.3 chance of your best possible outcome (and no lower chance), and a 0.7 chance of your worst possible outcome. Getting pizza for certain. it means that your utility for getting pizza is:arrow_forwardGive explanation to all options....arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Managerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage LearningEconomics (MindTap Course List)EconomicsISBN:9781337617383Author:Roger A. ArnoldPublisher:Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Cengage Learning
Economics (MindTap Course List)
Economics
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Cengage Learning