Which of the Following Best Explains the Difference Between Neoclassical

question 226

Multiple Choice

Which of the following best explains the difference between neoclassical economics and behavioral economics?

• A)Neoclassical economics believes that government should play a minimal role in the economy, while behavioral economics calls for a more active role for government.
• B)Neoclassical economics assumes that people are rational in their decision making, while behavioral economics believes people make systematic errors.
• C)There is no real difference; behavioral economics just studies more intently how the rational decision-making process works.
• D)Neoclassical economics no longer offers valid explanations for economic outcomes, while behavioral economics does.

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Definitions:

Salvage Value

The estimate of an asset's worth at the end of its useful life.

Average Accounting Return

A financial ratio that measures the net profit of a project or investment as a percentage of its initial cost.

Straight-line Depreciation

A method of allocating the cost of a tangible asset over its useful life in equal yearly amounts.

Net Income

The comprehensive earnings of a corporation after expenses and taxes have been taken away from its revenues.