Principles of Microeconomics By Robert Frank 7th Edition- Test Bank

Principles of Microeconomics By Robert Frank 7th Edition- Test Bank

Principles of Microeconomics, 7e (Frank)
Chapter 10 An Introduction to Behavioral Economics

1) In traditional economic models, homo economicus refers to a decision maker who:
A) is narrowly self-interested, well-informed, highly disciplined, and cognitively capable enough to solve optimization problems.
B) searches for relevant facts in a potentially haphazard way and who quits once his or her understanding has reached a certain threshold.
C) makes frequent departures from rational choice and instead relies upon judgmental heuristics, or rules of thumb, to guide decisions.
D) lacks impulse control and, as a result, may experience regret.

Answer: A
Explanation: Traditional economic models assume a decision maker who is narrowly self-interested, well-informed, highly disciplined and sufficiently cognitively capable to solve optimization problems. This individual is often referred to as homo economicus.
Difficulty: 1 Easy
Topic: Judgmental Heuristics or Rules of Thumb
Learning Objective: 10-01 Describe and illustrate numerous rules of thumb people employ when making decisions using incomplete information and explain how reliance on these rules sometimes leads to poor choices.
Bloom’s: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation

2) In traditional economic models, the narrowly self-interested, well-informed, highly disciplined and cognitively formidable decision maker is often referred to as:
A) a boundedly rational agent.
B) a behavioral economist.
C) homo economicus.
D) a satisficer.

Answer: C
Explanation: Traditional economic models assume a decision maker who is narrowly self-interested, well-informed, highly disciplined and sufficiently cognitively capable to solve optimization problems. This individual is often referred to as homo economicus.
Difficulty: 1 Easy
Topic: Judgmental Heuristics or Rules of Thumb
Learning Objective: 10-01 Describe and illustrate numerous rules of thumb people employ when making decisions using incomplete information and explain how reliance on these rules sometimes leads to poor choices.
Bloom’s: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation

3) In traditional economic models, homo economicus is assumed to be all of the following EXCEPT:
A) highly disciplined.
B) altruistic.
C) well-informed.
D) cognitively sophisticated.

Answer: B
Explanation: In traditional economic models, homo economicus is narrowly self-interested, well-informed, highly disciplined and sufficiently cognitively capable to solve optimization problems.
Difficulty: 1 Easy
Topic: Judgmental Heuristics or Rules of Thumb
Learning Objective: 10-01 Describe and illustrate numerous rules of thumb people employ when making decisions using incomplete information and explain how reliance on these rules sometimes leads to poor choices.
Bloom’s: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation

4) In traditional economic models, which of the following does NOT describe homo economicus:
A) impulsive.
B) narrowly self-interested.
C) well-informed.
D) cognitively sophisticated.

Answer: A
Explanation: In traditional economic models, homo economicus is narrowly self-interested, well-informed, highly disciplined and sufficiently cognitively capable to solve optimization problems.
Difficulty: 1 Easy
Topic: Judgmental Heuristics or Rules of Thumb
Learning Objective: 10-01 Describe and illustrate numerous rules of thumb people employ when making decisions using incomplete information and explain how reliance on these rules sometimes leads to poor choices.
Bloom’s: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation