Question

1.To encourage additional donations, voluntary organizations that provide public goods may issue a list of donors or subscribers (that identifies free riders by omission). This tactic works best in _________ communities where potential donors are _____________.

A. large; self-regarding

B. large; other-regarding

C. small; self-regarding

D. small; other-regarding

2.Full rationality involves which of the following assumptions?

A. People make use of all available information

B. People make decisions based on psychological factors.

C. Decision making includes both rational and irrational information.

D. People act on impulse

3.Choice should be framed in terms of __________ and ___________.

A. constraints; objectives

B. objectives; outcomes

C. goals; psychological needs

D. demand; supply

Answer 1

1. D

To encourage additional donations, voluntary organizations that provide public goods may issue a list of donors or subscribers (that identifies free riders by omission). This tactic works best in small communities where the donors are other regarding.

This works best in small communities as people are easily recognisible and the free riders can easily be distinguished and thus the relevant action can be taken by them. Only when people are other-regarding can they contribute to the welfare of community and hence the public good can be provided to all.

2. A

In rational theory, people make decision based on series of choices available to them to maximize their utility. They make decision based on rational information and not irrational information.

3. A

Any choice that needs to be made shall be based on the constraints that are present in relation to that problem and what the final objective that needs to be reached.