This quiz works best with JavaScript enabled. Home > Finance > Economics > Behavioral Economics > Behavioral Economics – Quiz 3 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Behavioral Economics Quiz 3 (30 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Rational Decision Making is a theory of economics that assumes that individuals always make decisions that provide them with the highest amount of personal utility. These decisions provide people with the greatest benefit or satisfaction given the choices available A) False. B) True. Show Answer Correct Answer: B) True. 2. Loss aversion refers to A) Describes why the pain of losing is psychologically twice as powerful as the pleasure of gaining. B) Describes our tendency to be more willing to pay when there is no physical money involved. C) Sentimentality for days gone by lead us to place increased value on social connectedness and less value on saving money. D) Describes how we tend to avoid options that we consider to be missing information. Show Answer Correct Answer: A) Describes why the pain of losing is psychologically twice as powerful as the pleasure of gaining. 3. Which statement about multi-branding is incorrect: A) It is a strategy to help achieve profit-maximisation. B) It aims to increase the number of products in the market. C) It is a way of increasing 'barriers to entry'. D) It helps overcome problems associated with 'brand switching'. Show Answer Correct Answer: C) It is a way of increasing 'barriers to entry'. 4. The tendencey to put more value on the things you already own is the endowment effect? A) False. B) True. Show Answer Correct Answer: B) True. 5. An increase in price has less of an effect at low prices than at high prices A) Income level. B) Link to complementary commodity. C) Availability of substitute. D) Price range. Show Answer Correct Answer: D) Price range. 6. Cognitive Bias is ..... A) The belief that our abilities are better than they actually are. B) The desire to seek out information that confirms our existing beliefs. C) The concept of placing more value on an item when we own it. D) An error in the way we think that can influence our decisions. Show Answer Correct Answer: D) An error in the way we think that can influence our decisions. 7. This technique consists of changing the attitude of rejection that is experienced in the face of financial risk, specifically in the face of the possibility of suffering losses in one's credit or in one's economy in general instead of making decisions to obtain benefits: A) Risk aversion. B) Cognitive overload. C) Gradient Meta Effect. D) Sunk cost. Show Answer Correct Answer: A) Risk aversion. 8. Sebastian began day trading stocks at the beginning of the summer. After a month, he made a profit of $ 200. Due to his short term success and his belief that he is a highly skilled trader, Sebastian puts his entire savings into the market. This is an example of A) The Endowment Effect. B) Overconfidence Bias. C) Confirmation Bias. D) The Fear of Missing Out (FOMO). Show Answer Correct Answer: B) Overconfidence Bias. 9. Bandwagon Effect refers to A) Doing something others are doing. B) A traveling band. C) Buying a product that can be sold for a lower price. D) How much you could obtain for an item at a later time. Show Answer Correct Answer: A) Doing something others are doing. 10. Herd mentality may explain why ..... A) Ben bought a shirt he liked from an unpopular brand. B) Davona chose to skip dinner with her friends and watched a movie at home instead. C) Ginnifer decided to keep her current phone even though her closest friends bought the new version. D) Mason went to see a movie with his friends even though he didn't like the genre. Show Answer Correct Answer: D) Mason went to see a movie with his friends even though he didn't like the genre. 11. They help us contribute to customer recovery and recommendation A) Use effective negotiation techniques. B) Apply IReNe principles. C) Send to survey on all calls. D) None of above. Show Answer Correct Answer: B) Apply IReNe principles. 12. Picking a restaurant that is more crowded over another because you are assuming that the food and service is better there. A) Loss aversion. B) Fear of missing out. C) Confirmation bias. D) Herd mentatlity. Show Answer Correct Answer: D) Herd mentatlity. 13. The tendency for positive impressions of a person, company, brand or product in one area to positively influence one's opinion or feelings in other areas A) Priming. B) Endowment effect. C) Regret aversion. D) Halo effect. Show Answer Correct Answer: D) Halo effect. 14. Your friend gives you an item. A day later, they offer to trade you another item of similar value. According to the endowment effect, most people would keep the item ..... A) They think looks the best. B) They received first. C) They were offered second. D) They could sell for the most. Show Answer Correct Answer: B) They received first. 15. A bat and a ball cost $ 1.10. The bat costs one dollar more than the ball. How much does the ball cost? A) 15 cents. B) 10 cents. C) 20 cents. D) 5 cents. Show Answer Correct Answer: D) 5 cents. 16. Which step requires you to identify the need or want? A) Select. B) Specify. C) Sift. D) None of above. Show Answer Correct Answer: B) Specify. 17. Investments of time, effort, and money that cannot be recovered are ..... A) Sunk costs. B) Avoidale costs. C) Relevant costs. D) Opportunity costs. Show Answer Correct Answer: A) Sunk costs. 18. In 2021, many people saw the value of Gamestop stock increasing sharply and purchased the stock too. These buyers were A) Experiencing Overprecision. B) Experiencing Hedonic Adaptation. C) Experiencing Herd Mentality. D) Experiencing Confirmation Bias. Show Answer Correct Answer: C) Experiencing Herd Mentality. 19. This technique consists of giving more weight to the information we provide to the Client in order to break the idea they have regarding their credit: A) Framing. B) Reciprocity. C) Anchorage. D) None of above. Show Answer Correct Answer: C) Anchorage. 20. Which of the following is not an example of a 'nudge': A) Displaying posters around the school about healthy eating choices. B) Putting fruit and other healthy snacks at the front counter of the school canteen where they are visible. C) Charging students a 'levy' for unhealthy food options so they are paying relatively more. D) Offering smaller portions for the unhealthy food options. Show Answer Correct Answer: C) Charging students a 'levy' for unhealthy food options so they are paying relatively more. 21. Name the Color BLUE A) Yellow. B) Red. C) Blue. D) Green. Show Answer Correct Answer: B) Red. 22. Name the Color RED A) Green. B) Red. C) Blue. D) Yellow. Show Answer Correct Answer: A) Green. 23. Due to hedonic adaptation, what do you expect would happen to Anu's level of happiness after buying a new jacket? A) It would initially increase, then return to a baseline level. B) It would remain at a baseline level, then increase over time. C) It would initially decrease, then return to a baseline level. D) It would remain at a baseline level, then decrease over time. Show Answer Correct Answer: A) It would initially increase, then return to a baseline level. 24. You've been offered $ 500 for your grandmother's diamond earrings, but you know that holing on to them is worth so much more than money. A) Sunk cost. B) Fear of missing out. C) Confirmation bias. D) Endowment effect. Show Answer Correct Answer: D) Endowment effect. 25. The use of social media platforms and websites to promote a product or service A) Confiramtion bias. B) Sunk cost fallacy. C) Social media marketing. D) Overprecision. Show Answer Correct Answer: C) Social media marketing. 26. Research done on peoples' salaries and happiness levels has shown that ..... A) Most people are satisfied with their current annual salaries. B) Increasing your annual salary is guaranteed to increase your long-term happiness. C) Humans typically become accustomed to how much they earn and eventually want more. D) Most people need to earn at least $ 200, 000 a year in order to be happy. Show Answer Correct Answer: C) Humans typically become accustomed to how much they earn and eventually want more. 27. You are a 17 year-old driver who has been a passenger in a car for your entire life. You also recently passed the written driving test and have 6 hours of behind-the-wheel experience. You consider yourself an above average driver. What kind of economic behavior is this? A) Confirmation Bias. B) Endowment Effect. C) Cognitive Bias. D) Overconfidence Bias. Show Answer Correct Answer: D) Overconfidence Bias. 28. You often spend more money due to FOMO A) True. B) False. Show Answer Correct Answer: A) True. 29. The tendency to put more value on things you already own A) Endowment effect. B) Loss aversion. C) Herd mentality. D) Hedonic adaption. Show Answer Correct Answer: A) Endowment effect. 30. Protect people from loss is ..... A) Usually an insurance which makes more people want to buy a product. B) Annually at a certain time of the year. C) A type of pressure to make people buy. D) None of above. Show Answer Correct Answer: A) Usually an insurance which makes more people want to buy a product. ← PreviousNext →Related QuizzesEconomics QuizzesFinance QuizzesBehavioral Economics Quiz 1Behavioral Economics Quiz 2Behavioral Economics Quiz 4Behavioral Economics Quiz 5Behavioral Economics Quiz 6Behavioral Economics Quiz 7Behavioral Economics Quiz 8Behavioral Economics Quiz 9 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books