Asked by Josie Pagnucco on Jul 23, 2024
Verified
Which of the following best explains the difference between neoclassical economics and behavioral economics?
A) Neoclassical economics believes that government should play a minimal role in the economy, while behavioral economics calls for a more active role for government.
B) Neoclassical economics assumes that people are rational in their decision making, while behavioral economics believes people make systematic errors.
C) There is no real difference; behavioral economics just studies more intently how the rational decision-making process works.
D) Neoclassical economics no longer offers valid explanations for economic outcomes, while behavioral economics does.
Neoclassical Economics
An economic theory that focuses on how consumer demand and production costs influence price, output, and income distribution in markets.
Behavioral Economics
A field of study that examines how psychological, cognitive, emotional, cultural, and social factors affect the economic decisions of individuals and institutions.
Rational Decision Making
A process of making choices that are logically consistent and aim at maximizing an individual's self-interest.
- Understand the fundamental differences between neoclassical economics and behavioral economics.
Verified Answer
Learning Objectives
- Understand the fundamental differences between neoclassical economics and behavioral economics.
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