Economics Quiz: Behavioural vs Neo-classical Economics

According to neo-classical economics, how do consumers seek to maximize their economic welfare?

• By using heuristics

• By maximizing profits

• By seeking the cheapest price

• By ranking the order of different outcomes

What is the foundation for demand and supply theory in neo-classical economics?

• Consumers seeking the cheapest price

• Firms seeking to maximize profits

• Maximizing economic welfare at work

• Diminishing marginal returns

In behavioural economics, why do some consumers behave irrationally?

• They have access to all the information

• They allow themselves to be influenced by advertisers

• They have unlimited time to process information

• They seek out the cheapest price

What is an example of a cognitive bias in decision making according to behavioural economics?

• Anchoring

• Maximizing profits

• Diminishing marginal returns

• Ranking the order of different outcomes

According to neo-classical economics, what motivates all economic activity?

• Altruism

• Social norms

• Egotism

• Empathy

What is the main focus of the 'Nudge Unit' in economic policy according to behavioural economics?

• Forcing individuals to make choices

• Mandating choices for individuals

• Making small changes to modify behavior

• Banning certain choices

What is an example of a default choice according to choice architecture in behavioural economics?

• Making a choice a default choice

• Opting out of organ donor schemes

• Giving individuals only a few choices

• Forcing individuals to make a choice

What is the concept of 'loss aversion' in behavioural economics?

• People feel the pain of losing more than the pleasure of gaining

• People always make rational decisions

• People are influenced by the default option

• People are not affected by losses or gains

What is the 'endowment effect' in the context of behavioural economics?

• People value things more when they own them

• People always seek to maximize their profits

• People are not influenced by ownership

• People give away their possessions easily

According to neo-classical economics, what is the 'rational choice theory'?

• People always make decisions that provide the greatest benefit

• People are influenced by cognitive biases

• People make decisions based on emotions

• People always make irrational choices