What happens when individual consumers don't have perfect information nor limitations to process information to make a decision? a) They tend to think rationally b) They are more affected by biases c) They put into more search to find proper information d) They don't make a decision

What happens when individual consumers don't have perfect information nor limitations to process information to make a decision? a) They tend to think rationally b) They are more affected by biases c) They put into more search to find proper information d) They don't make a decision

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter16: Information, Risk, And Insurance

Section: Chapter Questions

Problem 20CTQ: A website offers a place for people to buy and sell emeralds, but information about emeralds can be...

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Question

What happens when individual consumers don't have perfect information nor
limitations to process information to make a decision?
a) They tend to think rationally
b) They are more affected by biases
c) They put into more search to find proper information
d) They don't make a decision

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A website offers a place for people to buy and sell emeralds, but information about emeralds can be quite imperfect. The website then enacts a rule that all sellers in the market must pay for two independent examinations of their emerald, which are available to the customer for inspection. How would you expect this improved information to affect demand for emeralds on this website? How would you expect this improved information to affect the quantity of high-quality emeralds sold on the website?
2) Explain how utility could be used in a decision where performance is not measuredby monetary value.
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Think about a favorite thing you often buy or enjoy. It could be your favorite food, a favorite place to visit, a type of event, or something you make us part of a hobby. As part of this review you will create a chart ( just like the examples of total in marginal utility) showcasing the favorite item. Include the following information: How many you purchase or consume in the course of a day, week, or a month. Marginal utility of additional consumptions The total utility of all consumptions. Let’s assume that the largest utility you get from any one item is 20. Make it as interesting as you can by considering something that is important to you. Fill in the chart.