Behavioral Economics [1]

Which of the following least describes ‘Rationality’ as part of the traditional economic viewpoint of consumer behaviour:

• a) Consumers are motivated by self-interest

• b) Consumers carefully weigh up expected costs and benefits of each and every decision

• c) Consumers aim to minimise their utility

• d) Consumers are never instinctive or emotional when making decisions

‘Behavioural economics’ is best described as:

• a) A mix of economics and psychology to improve our understanding of consumers

• b) Having different assumptions of consumer behaviour than traditional viewpoints

• c) Explaining how consumers actually behave

• d) All of the above

The term ‘Ordered preferences’ is an assumption of traditional economic thinking where consumer behaviour is:

• a) Inconsistent over time

• b) Not based on rankings

• c) Revealed when consumers act on their preferences by spending their income

• d) Not related to utility

The law of diminishing marginal utility states that:

• a) Each additional unit of a good or service that is consumed generates more utility (satisfaction)

• b) The second unit of something consumed provides more satisfaction than the first

• c) Total utility grows more rapidly with each additional unit consumed

• d) Each additional unit of a good or service that is consumed generates less utility (satisfaction)

Informed decision is best described as:

• a) Having access to irrelevant and inaccurate information

• b) Having ‘imperfect information’

• c) Being able to determine costs of decisions

• d) Weighing up decisions to make choices that maximise satisfaction

Which of the following least reflects internal influences on

decision making:

• a) A delay in making an important decision due to procrastination

• b) Conspicuous consumption of an exotic sports car

• c) Purchasing coffee at McDonald’s McCafe due to its support of sustainable practices

• d) Brand loyalty through marketing

Which of the following does not relate to the traditional economic viewpoint of business in the economy:

• a) Businesses act purely for their own benefit

• b) Businesses do not reallocate resources to goods and services most being demanded

• c) Businesses are interested at producing at the lowest possible cost

• d) Businesses are motivated by profit maximisation

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

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

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’