In 2009,the Federal Government Created a Program Called Cash for Clunkers

question 86

Multiple Choice

In 2009,the federal government created a program called Cash for Clunkers whereby consumers could trade in a less efficient car for a more efficient car and receive a higher value than they would have otherwise.How would an economist understand the decision that consumers faced?

• A) Consumers would compare the marginal benefits to the marginal costs of replacing their cars,and this program made sure that marginal benefits would exceed marginal costs.
• B) Consumers would compare the marginal benefits to the marginal costs of replacing their cars,and this program made sure that marginal costs would exceed marginal benefits.
• C) The Cash for Clunkers program increased the opportunity cost of replacing a car.
• D) The Cash for Clunkers program served as a negative incentive to replacing a fuel-inefficient car.
• E) The Cash for Clunkers program served as an indirect incentive to replacing a fuel-inefficient car.

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Definitions:

Unconditioned Response

An automatic, natural response to a stimulus that occurs without any need for prior learning or conditioning.

Conditioned Stimulus

In classical conditioning, a previously neutral stimulus that, after association with an unconditioned stimulus, comes to trigger a conditioned response.

Preparedness

The state of being readily equipped to handle anticipated situations or emergencies.

Conditioning

A form of learning in which an individual's response to certain stimuli is modified by reinforcement or punishment.