The Tendency to Give More Weight to Possible Losses Than

question 37

Multiple Choice

The tendency to give more weight to possible losses than to possible gains when making decisions that require tradeoffs is known as ____.

• A)the certainty effect
• B)temporal discounting
• C)risk aversion
• D)the status quo bias

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Definitions:

Social Cost

The cost to society as a whole due to an activity, including both direct costs incurred and indirect effects (such as environmental damage or health impacts).

Marginal Cost

Marginal Cost is the additional cost incurred from producing one more unit of a good or service, an important concept in economics for decision-making regarding production levels.

Deadweight Loss

describes a loss of economic efficiency that can occur when the equilibrium for a good or a service is not achieved or is distorted by external factors like taxes or subsidies.

Demand Curve

represents the relationship between the price of a good and the quantity of that good consumers are willing to purchase.