Behavioral Economics Recognizes That People Use System 1 to Make

question 106

Multiple Choice

Behavioral economics recognizes that people use System 1 to make decisions more often than they use System 2. Which of the following is an implication of that decision-making process?

• A)A majority of decisions are not made according to the neoclassical assumption of rational behavior.
• B)Most decisions are made following a careful calculation of costs and benefits.
• C)Even though most decisions are irrational, the neoclassical model still accurately predicts outcomes.
• D)System 1 is best at making optimal decisions.

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Definitions:

Brake Drums

Components of a drum brake system in vehicles, consisting of a rotating drum that is forced against brake shoes to create friction and slow the vehicle.

Cooling

The process of removing excess heat from a system or component to prevent overheating and maintain optimal operation.

Fins

Thin, extended surfaces used to increase the area of an object to enhance heat dissipation, common in radiators and heatsinks.

Hydraulic Drum Brake

A type of brake that uses hydraulic pressure to press brake shoes against a drum attached to the wheel, generating friction to stop the vehicle.