In Behavioral Economics,the Endowment Effect Refers to

question 34

Multiple Choice

In behavioral economics,the endowment effect refers to

• A) most people believe that most wealthy people inherit their wealth.
• B) many people would be indifferent between being endowed with money or knowledge.
• C) many people place a higher value on what they own than when they consider purchasing.
• D) most people respond to tax incentives to provide an endowment for their children.

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Definitions:

R&D Costs

Refers to expenditures related to the research and development of a company’s goods or services. These costs are intended to provide for future growth and innovation.

Net Income

The net income of a business once all costs and taxes are deducted from the overall revenue.

Goodwill

An intangible asset that arises when a business is purchased for more than the fair value of its net identifiable assets.

Rate of Return

A measure of the profitability of an investment expressed as a percentage of the original investment.