Miscellaneous Economic MCQs

Which concept suggests that individuals often make decisions based on emotions and biases rather than rationality?

A) Marginal utility

B) Behavioral economics

C) Game theory

D) Efficient market hypothesis

Loss aversion refers to the tendency of individuals to:

A) Prefer risky investments over safe ones

B) Value losses more than equivalent gains

C) Ignore sunk costs in decision-making

D) Maximize utility through rational choices

Which cognitive bias involves overestimating the likelihood of rare events based on vivid or recent experiences?

A) Anchoring bias

B) Availability heuristic

C) Confirmation bias

D) Prospect theory

Behavioral economics incorporates insights from which other discipline?

A) Psychology

B) Sociology

C) Political science

D) Anthropology

Which economic concept challenges the assumption of perfect rationality in traditional economic models?

A) Bounded rationality

B) Game theory

C) Comparative advantage

D) Elasticity of demand

Nash equilibrium is a concept in game theory that:

A) Maximizes individual utility

B) Minimizes social welfare

C) Represents stable strategies in strategic interactions

D) Achieves perfect competition

A dominant strategy is a strategy that:

A) Guarantees the highest payoff regardless of the opponent’s choice

B) Is used by all players in a game

C) Leads to a Nash equilibrium

D) Maximizes total utility

Which game theory concept involves two players making decisions simultaneously without knowing the other’s actions?

A) Sequential game

B) Simultaneous game

C) Zero-sum game

D) Cooperative game

The “Prisoner’s Dilemma” is an example of a game that illustrates the concept of:

A) Dominant strategies

B) Nash equilibrium

C) Cooperation and competition

D) Risk aversion

What is the main objective of game theory in economics?

A) Predicting individual behavior in social interactions

B) Analyzing strategic decision-making in competitive markets

C) Maximizing individual utility through rational choices

D) Minimizing risk and uncertainty in economic transactions