Question 1

Table 22-7
Suppose that residents of a town are asked to vote on the best way to improve the safety of an intersection. The three choices are: a stoplight, a 4-way stop, and a 2-way stop. The voters are divided into three groups based on their preferences.
Voter Type
 
-Refer to Table 22-7. Based on the information in the table, which of the following statements is true?

Accepted Answer

A)   In a vote between a 2-way stop and a stoplight, stoplight wins because 40% of voters have stoplight as their 1st choice.
B)   In a vote between a 2-way stop and a 4-way stop, the 4-way stop wins getting 80% of the total vote.
C)   In a vote between a 4-way stop and a stoplight, there is a tie because each gets 40% of the vote.
D)   None of the above are true.E) A) and D)
F) B) and D)

Question 2

The results of the ultimatum game illustrate the fact that

Accepted Answer

A)   people's behavior is often driven by an innate sense of fairness.
B)   homo economicus is a good description of people's behavior.
C)   self-interest brings out the most efficient economic outcome.
D)   Both b and c are correct.E) None of the above
F) C) and D)

Question 3

Studies of human decision-making have found that people do not give enough weight to a small number of vivid observations.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following statements is not correct?

Accepted Answer

A)   The median voter theorem explains why politicians appeal to the middle of the voting distribution.
B)   Based on studies of human decision making, most people prefer to procrastinate, both in the immediate future and in the distant future.
C)   Screening refers to an uninformed party trying to extract information from an informed party.
D)   Advertising can be an example of a company signaling the quality of its products.E) A) and B)
F) C) and D)

Question 5

The median voter's preferred outcome is the same as the

Accepted Answer

A)   average preferred outcome.
B)   outcome preferred by the greatest number of voters.
C)   outcome produced by majority rule.
D)   outcome preferred by Arrow's "perfect" voter.E) None of the above
F) All of the above

Question 6

Which of the following relationships involves asymmetric information?

Accepted Answer

A)   A potential employee knows more about his skills and motivations than potential employers.
B)   The seller of a used car knows of mechanical problems that aren't easy for the average buyer to observe.
C)   A real estate agent knows the lowest price a seller is willing to sell her house for, but does not reveal it to people he shows the house.
D)   All of the above are correct.E) A) and B)
F) A) and C)

Question 7

The problem that arises when one person performs a task on behalf of another person is called the lemons problem.

Accepted Answer

A) True 
 B)False

Question 8

People with hidden health problems are more likely to buy health insurance than other people. As a result, people in average health may observe the high prices of insurance and decide not to buy it. This is an example of

Accepted Answer

The answer of People with hidden health problems are more...

Question 9

Based on the studies of human decision making, which of the following statements is correct?

Accepted Answer

A)   Most people are not bothered by perceived unfairness as long as they receive some compensation, even if the amount is very small.
B)   Most people are very willing to change their minds.
C)   Many people's preferences are inconsistent over time.
D)   All of the above are correct.E) A) and C)
F) A) and D)

Question 10

Table 22-24
The citizens of Mayville are having a severe budget shortage and are faced with eliminating athletics from the town high school. The town administrator has determined that the town can afford to maintain one sport. Exactly one of the three choices will prevail, and the choice will be made by way of pairwise voting, with the majority determining the outcome on each vote. The preferences of the voters are summarized in the table below.
Voter Type
 
-Refer to Table 22-24. Suppose the townspeople vote and choose hockey but the town administrator overrules the vote and chooses football because the town's football team has a chance of winning the state championship. Which of the properties of Arrow's impossibility theorem is violated?

Accepted Answer

The answer of Table 22-24
The citizens of Mayville are having...

Question 11

Suppose a community is debating how much money to spend on improvements to the high school. The members of the community who have children advocate spending $20 million to make improvements. The remaining 60% of the community thinks the high school is just fine and does not want to spend anything. What will the outcome be?

Accepted Answer

$0 spent o...

Question 12

Which of the following sets of preferences can not satisfy the property of transitivity?

Accepted Answer

A)   Plan A is preferred to plan D. Plan D is preferred to plan B. Plan C is preferred to plan B.
B)   Plan A is preferred to plan B. Plan B is preferred to plan C. Plan A is preferred to plan C.
C)   Plan C is preferred to plan A. Plan B is preferred to plan A. Plan C is preferred to plan c.
D)   Plan D is preferred to plan d. Plan C is preferred to plan B. Plan B is preferred to plan D.E) A) and D)
F) A) and B)

Question 13

The majority of Americans, when asked how many states they could name, think they could name all fifty. However, when they are asked to do so, very few are able to come up with all fifty. This is an example of which systematic mistake that people make?

Accepted Answer

People are...

Question 14

Asymmetric information

Accepted Answer

A)   is not an area of current research in economics.
B)   can take the form of a hidden action or a hidden characteristic.
C)   explains Arrow's impossibility theorem.
D)   is uncommon in corporate management.E) A) and D)
F) None of the above

Question 15

Arrow's impossibility theorem is "disturbing" in the sense that it proves that

Accepted Answer

A)   no voting system is perfect.
B)   only a dictator can produce a desirable social outcome.
C)   the preferences of the wealthy should be given more weight than the preferences of the poor.
D)   the centuries-old Condorcet paradox was not a paradox after all.E) None of the above
F) B) and C)

Question 16

Which of the following would be an example of a principal trying to deal with a moral hazard problem?

Accepted Answer

A)   The parents of an infant secretly place video cameras in their house before the baby-sitter arrives.
B)   An insurance company checks police records to determine if its policyholders have received traffic citations.
C)   An employer examines his workers' output on a daily basis.
D)   All of the above are correct.E) C) and D)
F) All of the above

Question 17

Economists have found that asymmetric information is not very prevalent.

Accepted Answer

A) True 
 B)False

Question 18

If the median voter theorem holds,

Accepted Answer

A)   a Borda count will violate the principle of transitivity.
B)   the Condorcet paradox also holds.
C)   minority views will not receive much consideration.
D)   All of the above are correct.E) None of the above
F) All of the above

Question 19

Which of the following is a plausible explanation for a firm paying above-equilibrium wages to its workers?

Accepted Answer

A)   It increases the probability that a worker who shirks will be caught.
B)   It discourages workers from shirking out of fear of losing their high-paying job.
C)   The Condorcet Paradox suggests that paying high wages will result in greater effort by employees.
D)   By paying a high wage, employers solve this adverse selection problem and motivate the employees to work harder.E) A) and D)
F) B) and D)

Question 20

Ihaveathousandfriends Social Networking firm had a remarkably profitable year. As a result, its employees expect to receive bonus checks. Which of the following insights into human behavior do the employees exhibit?

Accepted Answer

A)   People are overconfident.
B)   People care about fairness.
C)   People are reluctant to change their minds.
D)   People are inconsistent over time.E) A) and B)
F) C) and D)

Exam 22: Frontiers of Microeconomics

If the median voter theorem holds,

Correct Answer
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People with hidden health problems are more likely to buy health insurance than other people. As a result, people in average health may observe the high prices of insurance and decide not to buy it. This is an example of

Correct Answer
verified

Studies of human decision-making have found that people do not give enough weight to a small number of vivid observations.

Correct Answer
verified

Correct Answer
verified
$0 spent o...
View Answer

The majority of Americans, when asked how many states they could name, think they could name all fifty. However, when they are asked to do so, very few are able to come up with all fifty. This is an example of which systematic mistake that people make?

Correct Answer
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People are...
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Asymmetric information

Correct Answer
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The problem that arises when one person performs a task on behalf of another person is called the lemons problem.

Correct Answer
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The results of the ultimatum game illustrate the fact that

Correct Answer
verified

Correct Answer
verified

Ihaveathousandfriends Social Networking firm had a remarkably profitable year. As a result, its employees expect to receive bonus checks. Which of the following insights into human behavior do the employees exhibit?

Correct Answer
verified

Arrow's impossibility theorem is "disturbing" in the sense that it proves that

Correct Answer
verified

Economists have found that asymmetric information is not very prevalent.

Correct Answer
verified

Which of the following sets of preferences can not satisfy the property of transitivity?

Correct Answer
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Which of the following is a plausible explanation for a firm paying above-equilibrium wages to its workers?

Correct Answer
verified

Which of the following relationships involves asymmetric information?

Correct Answer
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Based on the studies of human decision making, which of the following statements is correct?

Correct Answer
verified

The median voter's preferred outcome is the same as the

Correct Answer
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Correct Answer
verified

Which of the following would be an example of a principal trying to deal with a moral hazard problem?

Correct Answer
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Which of the following statements is not correct?

Correct Answer
verified

Exam 22: Frontiers of Microeconomics

If the median voter theorem holds,

Correct AnswerverifiedShow Answer

People with hidden health problems are more likely to buy health insurance than other people. As a result, people in average health may observe the high prices of insurance and decide not to buy it. This is an example of

Correct AnswerverifiedShow Answer

Studies of human decision-making have found that people do not give enough weight to a small number of vivid observations.

Correct AnswerverifiedShow Answer

Correct Answerverified$0 spent o...View AnswerShow Answer

The majority of Americans, when asked how many states they could name, think they could name all fifty. However, when they are asked to do so, very few are able to come up with all fifty. This is an example of which systematic mistake that people make?

Correct AnswerverifiedPeople are...View AnswerShow Answer

Asymmetric information

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The problem that arises when one person performs a task on behalf of another person is called the lemons problem.

Correct AnswerverifiedShow Answer

The results of the ultimatum game illustrate the fact that

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Ihaveathousandfriends Social Networking firm had a remarkably profitable year. As a result, its employees expect to receive bonus checks. Which of the following insights into human behavior do the employees exhibit?

Correct AnswerverifiedShow Answer

Arrow's impossibility theorem is "disturbing" in the sense that it proves that

Correct AnswerverifiedShow Answer

Economists have found that asymmetric information is not very prevalent.

Correct AnswerverifiedShow Answer

Which of the following sets of preferences can not satisfy the property of transitivity?

Correct AnswerverifiedShow Answer

Which of the following is a plausible explanation for a firm paying above-equilibrium wages to its workers?

Correct AnswerverifiedShow Answer

Which of the following relationships involves asymmetric information?

Correct AnswerverifiedShow Answer

Based on the studies of human decision making, which of the following statements is correct?

Correct AnswerverifiedShow Answer

The median voter's preferred outcome is the same as the

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following would be an example of a principal trying to deal with a moral hazard problem?

Correct AnswerverifiedShow Answer

Which of the following statements is not correct?

Correct AnswerverifiedShow Answer

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$0 spent o...
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People are...
View Answer

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