Which of These Is an Example of Rational Inattention

question 38

Multiple Choice

Which of these is an example of rational inattention?

• A)submitting a paper with a few typos,knowing that they won't affect the grade
• B)sleeping in later than you had intended
• C)a firm delaying price changes to avoid losing customers
• D)a firm being unsure of its competitors' prices
• E)a firm changing prices so often its customers stop noticing

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Definitions:

Current Ratio

A liquidity ratio that measures a company's ability to pay short-term obligations with its current assets.

Liquidity

The simplicity of converting an asset or security into cash without impacting its market value.

P/E Ratio

The price-to-earnings ratio, a valuation metric comparing the current share price of a company to its per-share earnings.

ROE

Return on Equity, a financial ratio that measures a company's profitability relative to the equity.