One Major Consequence of the Framing Effect Is That

question 150

Multiple Choice

One major consequence of the framing effect is that

• A)people may spend more to insure themselves against rare events but leave themselves uninsured against more common events.
• B)someone could persist in pursuing a failed policy despite overwhelming evidence of the failure.
• C)major business projects may create bottlenecks in the organization because they are not completed as scheduled.
• D)decision makers may make faulty decisions if they are lulled by the environment in which they are making their decisions.

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Definitions:

Marginal Expenditure Curve

A graph that shows the additional cost incurred by acquiring one more unit of a good or service.

Monopsony

A market situation in which there is only one buyer for a product or service, giving that buyer substantial power over prices.

Rightward Shift

A movement to the right on a graph, indicating an increase in quantity supplied or demanded at a given price.

Subsidy

Payment reducing the buyer’s price below the seller’s price; i.e., a negative tax.