Consumer Skillz (Econ)

Consumer Skillz​

Multiple Choice

Select the best definition of BEHAVIORAL ECONOMICS. 

• Behavioral economics analyzes the supply and demand curve of consumer purchases. 

• Behavioral economics is the study of individual money management techniques to reach long-term financial goals.

• Behavioral economics is the study of regional, national, and global economic policies.

• Behavioral economics analyzes psychological insights such as emotional and social factors that impact economic decisions.

Multiple Choice

The Endowment Effect is our tendency to assign more value to the things we already own compared to ... 

• the things we could own.

• the things that we have sold. 

• the things we have purchased on credit. 

• the things we have purchased in the past.

Multiple Choice

When we continue using a product or service that makes us unhappy because the cost has already been incurred and cannot be recovered. This is an example of...

• Endowment Effect

• Sunk Cost Fallacy

Open Ended

How do companies make money with membership fees? Explain.

Multiple Choice

Select the best definition of TRANSACTION UTILITY. 

• Transaction utility describes the happiness or sadness a consumer gets from the perceived value of the deal.

• Transaction utility is the amount of financial savings you obtain from a big-ticket purchase. 

• Transaction utility describes the influence of uncontrollable events on a purchase. 

• Transaction utility is the logical approach to spending and saving money. 

Multiple Choice

TRUE OR FALSE: Humans often make predictable financial mistakes. 

• TRUE

• FALSE

Multiple Choice

How much did the auto industry spend on advertising in 2014?

• $24.2 billion

• $420 million

• $14.2 billion

• $4.2 billion

Multiple Choice

Which of these does NOT make buying a new a "triple threat"?

• The car depreciates in value.

• You borrow money at interest to pay for the car.

• You have to spend money to maintain the car.

• You have to buy gas to operate the car.

Multiple Choice

How quickly do new cars depreciate?

• 5% when you drive off the lot; 53% in the first 5 years.

• 10% when you drive off the lot; 53% in the first 5 years.

• 5% when you drive off the lot; 43% in the first 5 years.

• 10% when you drive off the lot; 63% in first 5 years.

Multiple Choice

How should you eliminate as much as the "triple threat" as possible?

• Buy a car that is at least 5 years old and pay in cash.

• Buy a 10 years old car and pay with a credit card.

• Buy a car that is at least 3 years old and borrow money.

• Buy a car that is 10 years old and pay in cash.

Multiple Choice

How can you determine if you can afford a car payment?

• If you don't have to borrow more to cover necessities.

• If you can also save the same amount as the payment its OK.

• Buy a 10 years old car and pay with a credit card.

• None of the above.

Multiple Choice

What does he mean when he says he doesn't want  to spend half a million on a new car, even though he likes that new car smell?

• He doesn't want to give up the nearly half a million dollars he could make by investing the difference in loan payments.

• His car cost him nearly half a million to purchase.