Decision Making and Trade-offs Quiz
Test your knowledge on decision-making processes, trade-offs, biases, and rationality in behavioral economics with this quiz.
#1
What is decision making?
A process of selecting the best option among alternatives
A process of randomly choosing options
A process of avoiding making choices
A process of delaying choices indefinitely
#2
Which of the following is NOT a step in the decision-making process?
Identifying alternatives
Weighing trade-offs
Choosing the first option that comes to mind
Assessing consequences
#3
What is a trade-off?
Choosing between equally beneficial options
Selecting the option with the highest cost
Sacrificing one thing for another
Avoiding making decisions
#4
Which of the following is an example of opportunity cost?
The cost of purchasing a product
The benefits of choosing one option over another
The cost of the next best alternative
The cost of making a decision
#5
What is the difference between a trade-off and an opportunity cost?
There is no difference; they refer to the same concept.
Trade-off involves making a choice between alternatives, while opportunity cost is the value of the next best alternative foregone.
Trade-off refers to the benefits of a decision, while opportunity cost refers to the drawbacks.
Trade-off is only applicable in economic decisions, while opportunity cost applies to all types of decisions.
#6
Which of the following is NOT a common decision-making heuristic?
Confirmation bias
Anchoring
Representativeness
Algorithmic thinking
#7
What does the maximization principle suggest in decision-making?
To always choose the option with the highest cost
To maximize benefits while minimizing costs
To avoid making decisions
To always select the first option that comes to mind
#8
What is the 'status quo bias' in decision-making?
A tendency to stick with the current situation, even if better options exist
A tendency to always choose the option with the highest perceived status
A tendency to favor options that are familiar
A tendency to make decisions based on social status
#9
In decision theory, what does 'satisficing' refer to?
Selecting the best possible option
Choosing the option that minimizes regret
Accepting a satisfactory but not necessarily optimal solution
Delaying the decision indefinitely
#10
Which of the following is an example of a sunk cost?
The cost of purchasing a new machine for a business
The cost of repairing a broken machine
The cost of training employees
The cost of an advertising campaign that did not yield expected results
#11
What is the role of risk aversion in decision-making?
To encourage taking risks in all decisions
To minimize risks at all costs
To balance risks and rewards
To ignore risks completely
#12
Which of the following is NOT a common cognitive bias that affects decision-making?
Overconfidence bias
Confirmation bias
Decision fatigue bias
Anchoring bias
#13
What is the role of intuition in decision-making?
To always trust gut feelings over rational analysis
To disregard rational analysis entirely
To complement rational analysis by providing valuable insights
To replace rational analysis with emotional responses
#14
In decision-making, what is the 'groupthink' phenomenon?
A tendency for group members to conform to a shared belief without critically evaluating alternatives
A tendency for groups to always choose the most innovative option
A tendency for groups to argue and disagree excessively
A tendency for groups to avoid making decisions altogether
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