Question : 21) One reason that consumers and businesses might not act : 1245196

21) One reason that consumers and businesses might not act rationally is

A) it is difficult to obtain enough information about the elasticities of demand and supply.

B) they may not realize their actions are inconsistent with their goals.

C) consumer tastes change constantly.

D) they do not always value fairness when they make choices.

22) The highest-valued alternative that must be given up to engage in an activity is the definition of

A) utility.

B) implicit cost.

C) opportunity cost.

D) economic sacrifice.

23) Which of the following is a common mistake made by consumers?

A) taking into account the implicit costs of an activity

B) ignoring sunk costs

C) being overly optimistic about their future behavior

D) being overly pessimistic about their future behavior

24) Alan Krueger conducted a survey of fans at the 2001 Super Bowl who purchased tickets to the game for $325 or $400. Krueger found that (a) 94 percent of those surveyed would not have paid $3,000 for their tickets, and (b) 92 percent of those surveyed would not have sold their tickets for $3,000. These results are evidence of

A) the high value fans place on watching the Super Bowl in person, rather than on television.

B) the failure of consumers to take into account nonmonetary opportunity costs.

C) the failure of consumers to ignore sunk costs.

D) consumers being overly optimistic about their future behavior.

25) Alan Krueger conducted a survey of fans at the 2001 Super Bowl who purchased tickets to the game for $325 or $400. Krueger found that (a) 94 percent of those surveyed would not have paid $3,000 for their tickets, and (b) 92 percent of those surveyed would not have sold their tickets for $3,000. These results are an example of

A) the tendency of people to be unwilling to sell a good they already own even if they are offered a price that is greater than the price they would be willing to pay if they did not already own it.

B) the tendency for consumers to account for monetary costs but to ignore sunk costs.

C) consumers placing a high value on a product because it makes them appear to be fashionable.

D) the law of demand.

26) Alan Krueger conducted a survey of fans at the 2001 Super Bowl who purchased tickets to the game for $325 or $400. Krueger found that (a) 94 percent of those surveyed would not have paid $3,000 for their tickets, and (b) 92 percent of those surveyed would not have sold their tickets for $3,000. These results are an example of

A) rational consumer behavior.

B) the endowment effect.

C) the fallacy of composition.

D) the failure to ignore sunk costs.

27) What is the endowment effect?

A) the tendency of people to be unwilling to sell something they already own even if they are offered a price that is greater than what they would be willing to pay to buy the good if they did not already own it

B) the tendency of people to be unwilling to sell something they already own because of its sentimental value

C) the tendency of people to overstate the value of a good they already own even though similar items can be purchased at a lower price

D) the sum total of assets that a person has acquired over the years

28) Costs that have already been incurred, and which cannot be recovered, are known as

A) short-run fixed costs.

B) implicit costs.

C) unavoidable costs.

D) sunk costs.

29) A sunk cost is

A) another term that means opportunity cost.

B) a term used to describe the cost of capital that the owners of a firm sink into their business.

C) the highest valued alternative that must be given up to engage in an activity.

D) a cost that has already been paid and cannot be recovered.

*:  Recurring

Learning Outcome:  Micro-11: Explain how to measure consumer preferences and discuss the major theories about consumer choice

AACSB:  Analytic thinking

30) Suppose you pre-ordered a non-refundable movie ticket to X-Men: Days of Future Past. On the day of the movie you decide that you would rather not go to the movie. According to economists, what is the rational thing to do?

A) Since the cost of the movie ticket is a sunk cost, it should not influence your decision. Your decision should be based solely on whether you want to see the movie or not.

B) You should not waste resources. Since you have paid for the ticket you should watch the movie.

C) Your should go to the movie to minimize your losses.

D) You should go to the movie to maximize your utility.