I hope you are well. Here are the explanations for the last three.
The endowment effect makes you give more value to things that you own. So we are looking for an example of the something that is owned that is being given more value than it should have.
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.Nothing is owned
B. Cancelling a vacation which has been planned for six months so that you can avoid missing a potentially lucrative business deal.Nothing is owned
C. Selling an old coffee mug that you no longer use for more than the market value only because you consider it yours.You own the mug and you assign it more value because you own it. Correct
D. Putting a high value on your parents furniture because you associate it with childhood memories.You don't own the furniture
E. Placing a lower value on a baseball card that you plan to buy because you already own a card of comparable value.This is not endowment effect. This is saying that you have a certain priced card and because of that you don't necessarily need another in that category therefore you are not willing to pay a lot for this other card of comparable value.
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.This has the right content and tone. The passage does describe flaws and then suggests incorporating other fields of study to improve the models. Correct
B. To provide a history of a certain type of economics along with a prediction for its future.Overall it is not history.
C. To describe a flaw in standard economic theory and provide several examples of how the flaw manifests itself in practical applications.This is missing the recommendation part.
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.There was no experimental evidence of the benefits
E. To propose an adjustment to standard economic theory incorporating new ideas from other scientific fields.This is close but the ideas from the other fields are not new
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.This goes too far by saying accurately predict human behavior. The models have certain characteristics that are better than the economic models but that's about as far as we can go.
B. Decision making models created by some biologists are superior to models created by economists who adhere to the standard economic models.We know that the evidence from other fields can help economic models but we do not know if the models of biology are better than the models of economics.
C. Some of the principles that are being incorporated into modern economics contradict the beliefs of some famous classic economists.We don't know about famous classic economists beliefs
D. Self-interest should not be considered as a major contributor to rational decision making.Although self-interest is mentioned and the passage says it is overemphasized the passage does not say that it should not be considered a major contributor..
E. Traditional economics has not considered increased pleasure and reduced pain as two distinct sources of happiness.The passage emphasizes that Economics generally frames people as pleasure seeking but forgets that they are loss averting. CORRECT
"It is a curious property of research activity that after the problem has been solved the solution seems obvious. This is true not only for those who have not previously been acquainted with the problem, but also for those who have worked over it for years." -Dr. Edwin Land
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IMPROVE YOUR READING COMPREHENSION with the ECONOMIST READING COMPREHENSION CHALLENGE:
Here is the first set and some strategies for approaching this work: http://gmatclub.com/forum/the-economist-reading-comprehension-challenge-151479.html