Here is the second set of Economist Reading Comprehension Challenge.  Enjoy!

A Debt to Pleasure

http://www.economist.com/news/finance-and-economics/21576645-nobel-prizewinner-argues-overhaul-theory-consumer-choice

1.  In the experiment mentioned in the third paragraph it can be reasonably inferred that orthodox economics would have expected:

A.  a pleasurable experience to create longer lasting and more vibrant memories

B. a more exaggerated response to painful experiences

C.  the sequence of events to have less influence on the memory of the experience

D.  most people to have preferred a longer but less painful procedure

E.  most people to have preferred a shorter but more painful procedure

2.  According to the passage it could be reasonably inferred that some economists:

A.  believe that a majority of people behave in ways that can be predicted by standard models

B.  believe that some exceptions to the standard models of economics can be explained by theories developed in fields outside of economics

C.  use only real people as the basis for their economic models

D.  incorrectly apply the standard economic models to predict the behavior of real people

E.  would benefit by drawing information from various competing fields of economics

3. According the passage, which of  following is an example of the endowment effect?

A.  Buying a new car for more money than you had expected to spend because you felt emotionally attached to the brand name.

B.  Cancelling a vacation which has been planned for six months so that you can avoid missing a potentially lucrative business deal.

C.  Selling an old coffee mug that you no longer use for more than the market value only because you consider it yours.

D.  Putting a high value on your parents furniture because you associate it with childhood memories.

E.  Placing a lower value on a baseball card that you plan to buy because you already own a card of comparable value.

4.  Which of the following best expresses the main idea of the passage?

A.  To describe some flaws in traditional economic thinking and to recommend a course of action to improve economic models and the accuracy of their predictions.

B.  To provide a history of a certain type of economics along with a prediction for its future.

C.  To describe a flaw in standard economic theory and provide several examples of how the flaw manifests itself in practical applications.

D.   To describe several ways in which economists can benefit from the decision making theories of other fields and provide experimental evidence of these benefits.

E.  To propose an adjustment to standard economic theory incorporating new ideas from other scientific fields.

 

5.  The author would most likely agree with which of the following statements?

A.  Other sciences outside of economics have developed decision making models which incorporate altruism, kindness, and loss aversion that can accurately predict human behavior.

B. Decision making models created by some biologists are superior to models created by economists who adhere to the standard economic models .

C.  Some of the principles that are being incorporated into modern economics contradict the beliefs of some famous classic economists.

D.  Self-interest should not be considered as a major contributor to rational decision making.

E.  Traditional economics has not considered increased pleasure and reduced pain as two distinct sources of happiness.

 

Answers:
1. C

2. B

3. C

4. A

5. E

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