In Problem 2, Ambrose Has the Utility Function U(x₁, X₂)

question 21

Multiple Choice

In Problem 2, Ambrose has the utility function U(x₁, x₂) . If Ambrose were initially consuming 81 units of nuts (good 1) and 22 units of berries (good 2) , then what is the largest number of berries that he would be willing to give up in return for an additional 40 units of nuts?

• A) 4
• B) 8
• C) 11
• D) 33
• E) 2

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Definitions:

Framing Effect

A cognitive bias where people react differently to a choice depending on how it is presented, or "framed," especially as a loss or gain.

Belief Perseverance

The psychological phenomenon where individuals maintain their convictions even when confronted with contrary evidence, showcasing the difficulty of changing deeply held beliefs.

Framing Effect

The cognitive bias where people's decisions are influenced by the way information is presented, rather than just the information itself.

Representativeness Heuristic

A cognitive shortcut that involves making judgments based on how well something matches or represents a particular prototype.