Ultimate Economics Game Theory In Behavioral Economics Test - 89+ MCQs: Economics - Game Theory in Behavioral Economics Quiz: Master the Intersection of Strategy and Behavior - Economics Game Theory In Behavioral Economics Test

1. What does 'Opportunity Cost' represent in Economics?

The explicit cost of a decision

The total expenses incurred

The value of the best alternative foregone

The benefits gained from a choice

2. What is the 'Sunk Cost Fallacy'?

The belief that past expenses should influence future decisions

The overestimation of one's abilities

The tendency to value items more when they are owned

The preference for immediate rewards over future benefits

3. Which game theory concept explores the outcomes when players can make credible threats or promises?

Pareto Efficiency

Perfect Competition

Signaling and Screening

Repeated Games

4. What is 'Perfect Competition' in Economics?

A market structure with a single seller and many buyers

A situation where firms have control over market prices

A market structure with identical products and many sellers

A situation where barriers to entry prevent new firms from entering the market

5. Which market structure is characterized by a single seller with no close substitutes?

Oligopoly

Perfect competition

Monopolistic competition

Monopoly

6. What is the concept of 'Moral Hazard'?

The tendency to make decisions based on previous outcomes

The risk that one party may change their behavior to the detriment of another party

The tendency to ignore sunk costs in decision-making

The impact of public opinion on market outcomes

7. Which economic model explores how individuals make decisions based on the perceived actions of others?

Rational Expectations

Game Theory

Utility Maximization

Supply and Demand

8. What does 'Asymmetric Information' signify?

A situation where one party in a transaction has more or better information than the other

Equal knowledge and information shared between parties in an economic exchange

The condition where all market participants have access to identical information

The principle that information should be distributed equally in a market

9. What is the 'Principal-Agent Problem'?

The challenge of aligning the interests of shareholders and management

The dilemma faced by policymakers in designing effective regulations

The difficulty of balancing short-term gains with long-term objectives

The risk of external factors influencing market outcomes

10. What is 'Utility' in Economics?

The total revenue of a firm

The satisfaction or pleasure derived from consuming goods and services

The amount of resources available in an economy

The rate of inflation in an economy

11. What is the 'Tragedy of the Commons'?

A situation where individual rationality leads to collective irrationality in resource usage

The economic concept explaining the cyclical nature of booms and busts

The dilemma faced by governments in deciding fiscal policy

The phenomenon where public goods are overproduced due to excessive demand

12. In Auction Theory, what is a Second-Price Auction?

An auction where the highest bidder pays the amount bid

An auction where the second-highest bidder pays the amount bid

An auction where all bidders pay their bid amounts

An auction where the lowest bidder wins the item

13. In Economics, what is the 'Tragedy of the Commons'?

A market failure due to incomplete information

The overuse of shared resources resulting in depletion

The inequitable distribution of wealth in a society

A situation where externalities cause market inefficiencies

14. What is a 'Public Good' in Economics?

A good that is provided by the government

A good that is non-excludable and non-rivalrous

A good that is produced without any cost

A good that is produced only by private companies

15. What does the Ultimatum Game demonstrate?

The rational behavior of players in strategic interactions

The role of fairness and social norms in decision-making

The optimal strategies for maximizing utility

The equilibrium outcomes in repeated games

16. Which economic concept refers to the total value of all final goods and services produced within a country's borders in a specific time period?

Gross National Product (GNP)

Net Domestic Product (NDP)

Gross Domestic Product (GDP)

National Income

17. What is the Nash Equilibrium in Game Theory?

A state where all players lose

A stable state where no player has an incentive to deviate unilaterally

An equilibrium achieved through coercion

A situation with maximum competition

18. What does 'Prospect Theory' emphasize in Behavioral Economics?

The influence of peer pressure on decision-making

The rational calculation of expected utility

The effects of government policies on consumer behavior

How individuals perceive potential losses and gains

19. What is 'Perfect Information' in Game Theory?

A situation where players have complete and accurate knowledge about the game

A game with no uncertainty or randomness

A scenario where all players have equal resources

A game where players always cooperate

20. What is a Common-pool Resource?

A resource owned by an individual or a group

A resource where one person's use reduces its availability for others

A resource managed by a centralized authority

A resource that is freely available to all

21. In the context of Behavioral Economics, what is 'Mental Accounting'?

The tendency to categorize and treat money differently based on its source, purpose, or intended use

The systematic errors in judgment that individuals make due to cognitive biases

The process of calculating the future value of money

The study of how individuals allocate their time and resources

22. Which term in Economics refers to the study of individual choice under scarcity?

Microeconomics

Macroeconomics

Behavioral Economics

Game Theory

23. What is the primary goal of 'Monetary Policy'?

To control the level of government spending

To regulate the balance of trade and international transactions

To control the supply of money and credit in the economy

To influence the allocation of resources in the private sector

24. What is 'Hyperbolic Discounting'?

The tendency to value immediate rewards more highly than future rewards, but less than immediate rewards received tomorrow

The belief that future costs and benefits should be discounted exponentially

The preference for future rewards over immediate ones

The concept of increasing the value of a future reward linearly

25. Which behavioral bias involves placing greater importance on immediate rewards over future gains?

Recency bias

Anchoring bias

Hyperbolic discounting

Confirmation bias

26. Which of the following is a characteristic of a 'Command Economy'?

Decentralized decision-making by individual firms

Consumer sovereignty and market-driven prices

Centralized planning and government control over resources

Free markets and minimal government intervention

27. What does the 'Endowment Effect' suggest?

Individuals tend to value items more highly simply because they own them

Prices of goods are determined by their production costs

People only consider the ends and not the means

An individual's preferences remain constant over time

28. Which of the following is a characteristic of a 'Public Good'?

It is rivalrous in consumption

It is excludable

It is non-excludable and non-rivalrous

It is produced by the government

29. What is 'Loss Aversion' in Behavioral Economics?

The tendency to prefer certain outcomes over uncertain ones

The preference for avoiding losses compared to acquiring equivalent gains

The overestimation of one's abilities

The tendency to focus on sunk costs

30. What does the 'Tragedy of the Commons' refer to?

The overuse or depletion of shared resources due to individual self-interest

The collapse of a market due to excessive regulation

The failure of a company to adapt to changing market conditions

The unpredictability of market outcomes

Economics - Game Theory in Behavioral Economics MCQ Test 3