A Professor Changes the Penalty for Cheating on Exams from Getting

question 207

Multiple Choice

A professor changes the penalty for cheating on exams from getting a 0 on the exam to getting an F in the course.The professor has

• A) increased the marginal cost of cheating.
• B) decreased the marginal benefit of cheating.
• C) made all the students act in the social interest.
• D) recognized that students don't respond to incentives.
• E) recognized that students don't make rational choices.

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Definitions:

Mortgage Default Rate

The percentage of borrowers who fail to make scheduled payments on their mortgage loans, leading to the risk of foreclosure.

Investment Banks

Financial institutions that assist individuals, corporations, and governments in raising capital by underwriting or acting as the client's agent in the issuance of securities.

Bundled Securities

Financial instruments that combine multiple individual assets, such as stocks or bonds, into a single package for investment purposes.

Household Debt

The total amount of money owed by all members of a household, including mortgages, credit cards, and other loans.