In 2009,the Federal Government Created a Program Called Cash for Clunkers

question 86

Multiple Choice

In 2009,the federal government created a program called Cash for Clunkers whereby consumers could trade in a less efficient car for a more efficient car and receive a higher value than they would have otherwise.How would an economist understand the decision that consumers faced?

• A) Consumers would compare the marginal benefits to the marginal costs of replacing their cars,and this program made sure that marginal benefits would exceed marginal costs.
• B) Consumers would compare the marginal benefits to the marginal costs of replacing their cars,and this program made sure that marginal costs would exceed marginal benefits.
• C) The Cash for Clunkers program increased the opportunity cost of replacing a car.
• D) The Cash for Clunkers program served as a negative incentive to replacing a fuel-inefficient car.
• E) The Cash for Clunkers program served as an indirect incentive to replacing a fuel-inefficient car.

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Definitions:

Spatial Updating

The processes by which individuals continually revise their mental representation of where things in the environment are with respect to their current location.

Demand Characteristics

Demand characteristics refer to the subtle cues or features in an experimental environment that may influence participants' behaviors or responses, thereby affecting the validity of the experiment.

Tversky

Amos Tversky, a cognitive and mathematical psychologist known for his work on decision-making and cognitive biases.

Method Of Loci

A mnemonic device that involves visualizing locations to organize and recall information.