1. Circle true or false by each statement,

1. True false The endowment effect says that a person who would sell his 1978 Buick for no less than $3000 might be willing to buy it from someone else for no more than $2700.
2. True false The rational choice model says that increasing the number of options cannot make a person worse off.
3. True false Behavioral economics says that people have full information about preferences, so they make fully informed choices about what to consume.
4. True false A cost of living adjustment like the CPI leads to an increase in utility because it ignores substitution bias