Which of These Is True of Behavioral Economics?​

question 81

Multiple Choice

Which of these is true of behavioral economics?​

• A)It borrows insights from sociology to explain certain economic decisions.
• B)It questions the basic assumptions in traditional economics, particularly utility and ability.
• C)It borrows insights from psychology to explain certain economic decisions.
• D)It questions the basic assumptions in traditional economics, particularly rationality and will power.
• E)It assumes that people act rationally to maximize their well-being.

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Definitions:

Common Stock

A type of security that represents ownership in a corporation, entitling the holder to vote on corporate matters and receive dividends.

Levered Firm

A company that uses debt financing in addition to equity in its capital structure, amplifying both potential gains and losses.

Call Option

This financial instrument endows the acquirer with the right, without enforcing the responsibility, to buy assets such as stocks, bonds, or commodities at a pre-agreed price during a nominated time interval.

Call Option

A financial contract giving the buyer the right but not the obligation to buy a stock, bond, commodity, or other instrument at a specified price within a specific time period.