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WorksheetsBehavioral Economics
Total questions: 13
Worksheet time: 7mins
Marginal Cost is?
The highest amount that customers will pay for a good
The lowest amount that customers will pay for a good
The cost of producing one additional good
The cost of producing 2 additional goods
Sunk costs are...
Costs that were part of a cruise ship that sunk
Costs that will end in a product
What a producer pays to supply a product to a market
Costs that cannot be recovered
Behavioral economics is …
The study of how rational people make economic decisions
The study of how irrational factors affect individual’s economic decisions
The study of how economies around the world interact with each other
The study of how investors choose which stocks to buy and sell
Guy bought tickets to a concert but there is a bad snow storm. He decides to go anyway because he paid for it. This is
Sunk Cost Fallacy
Endowment Effect
Overconfidence
Herd Mentality
Ally signs up for a Netflix trial. Because she “owns” a full account, she places high value on it and signs up. This is
Loss Aversion
Herd Mentality
Overprecision
The Endowment Effect
Peter can choose from two retirement accounts. Fearing a loss, he opts for the more conservative one. This is a type of
Confirmation Bias
Overconfidence
Loss Aversion
Fear of Missing Out (FOMO)
The Fear of Missing Out, or FOMO, is…
The effect of feeling a loss more than an equal gain
The anxiety that an interesting or exciting event is happening without you
Placing higher value on things you own
The opposite of YOLO (You Only Live Once)
People who win the lottery tend to return to their original levels of happiness after the novelty of winning wears off.
This is an example of the Endowment Effect
This is an example of Confirmation Bias
This is an example of Hedonic Adaptation
This is an example of Herd Mentality
Confirmation bias is …
The tendency to seek out information that supports our existing beliefs
The tendency to value something more because you own it
The belief that we are better at something than we actually are
The belief that we should do something because our friends are doing it
The Endowment Effect is …
Doing something because you see all of your friends doing it
Valuing something more because you own it
Returning to a baseline level of happiness after a major event
Continuing something because you have contributed resources to it
You are new to a city and find two restaurants near each other that offer a similar menu. You pick the more crowded one.
This is an example of Fear of Missing Out (FOMO)
This is an example of Herd Mentality
This is an example of Sunk Cost Fallacy
This is an example of Overvaluing
The irrational ways that we process information & make decisions using our own perspective and incomplete information.
Cognitive biases
Hedonic Adaptation
The Endowment Effect
Overprecision
Which of the following is an example of allowing sunk costs to impact your decision?
Not selling a baseball card that you think is worth more because you own it
Continuing to watch a movie that you don’t like because you paid to see it
Selling a stock because you see the price drop and want to avoid losses
Buying a new phone because you see all of your friends have that it
