This quiz works best with JavaScript enabled. Home > Finance > Economics > Behavioral Economics > Behavioral Economics – Quiz 7 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Behavioral Economics Quiz 7 (30 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. After learning about hedonic adaptation, Tamara wants to spend her money more wisely. Which of the following might help her do so? A) Purchasing a dress after seeing an ad on social media. B) Donating money to a charity that supports a cause she cares about. C) Buying a new laptop even though her current one still works well. D) Getting a new phone accessory for her phone case. Show Answer Correct Answer: B) Donating money to a charity that supports a cause she cares about. 2. The feeling of apprehension that one is either not in the know or missing out on information, events, experiences, or life decisions that could make one's life better. A) Confirmation bias. B) Herd mentality. C) Fear of missing out. D) Loss aversion. Show Answer Correct Answer: C) Fear of missing out. 3. Which of the following is TRUE about cognitive biases? A) There are only a handful of cognitive biases that exist. B) Awareness is the first step to overcoming the influence of a cognitive bias. C) It is easy to recognize when cognitive biases influence our own decisions. D) There is rarely anything you can do to combat a cognitive bias' influence. Show Answer Correct Answer: B) Awareness is the first step to overcoming the influence of a cognitive bias. 4. You ordered takeout. When you get home, the order is wrong and you don't like the food. However, you eat it anyway to "get your money's worth." This example of loss aversion is called the ..... A) Sunk cost fallacy. B) Endowment effect. C) Dunning Kruger effect. D) Hunger games. Show Answer Correct Answer: A) Sunk cost fallacy. 5. Term refers to an emotional bias that causes individuals to value an owned object higher, often irrationally, than its market value A) Availability heuristic. B) Endowment effect. C) Priming. D) Herd mentality. Show Answer Correct Answer: B) Endowment effect. 6. Life Values are ..... A) The tangible aspects of life, the external world, our physical health and well-being. B) The principles in life that are important to you. C) Our personal identity (how we see ourselves) and our social identity (how we believe others see us). D) Principles that are important to you because of the community in which you live. Show Answer Correct Answer: B) The principles in life that are important to you. 7. The feelings of anxiety that arise from the belief that you may be missing out on rewarding experiences that others are having A) The Bandwagon Effect. B) Herd Mentality. C) The Endowment Effect. D) Fear of Missing Out (FOMO). Show Answer Correct Answer: D) Fear of Missing Out (FOMO). 8. What is the term for assigning more value to things we already own? A) The endowment effect. B) The sunk cost fallacy. C) Transaction utility. D) Mental accounting. Show Answer Correct Answer: A) The endowment effect. 9. What are the top two causes of most people's FOMO? A) Food and jewelry. B) Events/parties and travel. C) Events/parties and travel. D) Shoes and clothes. Show Answer Correct Answer: B) Events/parties and travel. 10. The tendency people have to be more confident in their own abilities, such as driving, teaching, or spelling, than is objectively reasonable A) Overconfidence Bias. B) The Bandwagon Effect. C) Confirmation Bias. D) Loss Aversion. Show Answer Correct Answer: A) Overconfidence Bias. 11. How many determinants affecting the elasticity of the behavioral economics model? A) 2. B) 5. C) 4. D) 3. E) 1. Show Answer Correct Answer: C) 4. 12. The irrational ways that we process information & make decisions using our own perspective and incomplete information. A) Cognitive biases. B) Overprecision. C) Hedonic Adaptation. D) The Endowment Effect. Show Answer Correct Answer: A) Cognitive biases. 13. The tendency to prefer avoiding losses to acquiring equivalent gains A) Loss aversion. B) Endowment affect. C) Sunk costs. D) Confirmation bias. Show Answer Correct Answer: A) Loss aversion. 14. Which of the following is an example of companies using FOMO as a digital marketing tactic? A) Offering a one-click buy button. B) Using a countdown sales timer. C) Emailing you a birthday coupon. D) Using a countdown sales timer. Show Answer Correct Answer: B) Using a countdown sales timer. 15. Which of the following is not an effect of technology on business behaviour and trade in goods and services: A) If introduced into the production process it can drive down average unit costs. B) It can reduce the need for physical space to run business operations. C) It can be used by businesses to enhance the effectiveness of marketing strategies. D) It usually leads to business growth. Show Answer Correct Answer: C) It can be used by businesses to enhance the effectiveness of marketing strategies. 16. You buy a stock that has a price of $ 50 per share. A week later the stock's price drops to $ 25 per share (it's lost half its value). If you are affected by loss aversion you would be likely to ..... A) Do nothing. B) Buy more shares. C) Look for other stocks to buy. D) Sell the shares. Show Answer Correct Answer: D) Sell the shares. 17. The Endowment Effect is ..... A) Doing something because you see all of your friends doing it. B) Valuing something more because you own it. C) Returning to a baseline level of happiness after a major event. D) Continuing something because you have contributed resources to it. Show Answer Correct Answer: B) Valuing something more because you own it. 18. Based on the belief that most people make logical, rational decisions with their money. A) Behavioral Economics. B) Personal Economics. C) Cognitive Bias. D) Traditional Economics. Show Answer Correct Answer: D) Traditional Economics. 19. Behavioral economics is ..... A) The study of how economies around the world interact with each other. B) The study of how irrational factors affect individual's economic decisions. C) The study of how investors choose which stocks to buy and sell. D) The study of how rational people make economic decision. Show Answer Correct Answer: B) The study of how irrational factors affect individual's economic decisions. 20. What percentage of people make purchases due to FOMO? A) 78%. B) 60%. C) 45%. D) 25%. Show Answer Correct Answer: B) 60%. 21. Inner Values are ..... A) Principles that are important to you because of the community in which you live. B) Unrelated to how much money we actually have, these values reflect what we think or believe about money. C) Our personal identity (how we see ourselves) and our social identity (how we believe others see us). D) The tangible aspects of life, the external world, our physical health and well-being. Show Answer Correct Answer: C) Our personal identity (how we see ourselves) and our social identity (how we believe others see us). 22. Coupons is a loss aversion strategy A) True. B) False. Show Answer Correct Answer: A) True. 23. 75% of drivers believe that they are above average. Which type of overconfidence is this an example of? A) Overestimation. B) Overvaluing. C) Overplacement. D) Overprecision. Show Answer Correct Answer: C) Overplacement. 24. When a person has an exaggerated certainty that an answer is correct A) Hedonic Adaptation. B) Overprecision. C) Overestimation. D) Cognitive Bias. Show Answer Correct Answer: B) Overprecision. 25. How do behavioral economists view people differently than traditional economists? A) Behavioral economists acknowledge that people make predictable mistakes. B) Behavioral economists consider people as consistently making decisions that maximize economic outcomes. C) Behavioral economists think people are solely driven by external factors alone. D) Behavioral economists believe people always make rational decisions based on self-interest. Show Answer Correct Answer: A) Behavioral economists acknowledge that people make predictable mistakes. 26. Which of the following actions is the BEST way to counteract loss aversion when making a decision? A) Dwelling on the potential loss you may experience for several days. B) Making the choice that takes on the most risk possible. C) Reframing the decision to focus on the potential gains instead of the potential losses. D) Polling a bunch of your friends and family to see what they would decide. Show Answer Correct Answer: C) Reframing the decision to focus on the potential gains instead of the potential losses. 27. Free Trials and Samples ..... A) Usually last around a year or so. B) Let you try them out until you're ready to pay them. C) Give you a sense of ownership and when these are set to expire they make you want to buy a membership for continued ownership. D) Samples that usually last a few days then cancel until you can start a free trial. Show Answer Correct Answer: C) Give you a sense of ownership and when these are set to expire they make you want to buy a membership for continued ownership. 28. Max believes his sense of direction is excellent and refuses to ask for directions. Which overconfidence is he showing? A) Oversimplifying. B) Overprecision. C) Overplacement. D) Overestimation. Show Answer Correct Answer: D) Overestimation. 29. What is the term for the mental pleasure or pain we get from feeling like we paid less or more than something's worth? A) Transaction utility. B) The endowment effect. C) The sunk cost fallacy. D) Mental accounting. Show Answer Correct Answer: A) Transaction utility. 30. You are new to a city and find two restaurants near each other that offer a similar menu. You pick the more crowded one. A) This is an example of Fear of Missing Out (FOMO). B) This is an example of Herd Mentality. C) This is an example of Sunk Cost Fallacy. D) This is an example of Overvaluing. Show Answer Correct Answer: B) This is an example of Herd Mentality. ← PreviousNext →Related QuizzesEconomics QuizzesFinance QuizzesBehavioral Economics Quiz 1Behavioral Economics Quiz 2Behavioral Economics Quiz 3Behavioral Economics Quiz 4Behavioral Economics Quiz 5Behavioral Economics Quiz 6Behavioral Economics Quiz 8Behavioral Economics Quiz 9 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books