Question 1

Table 22-12
The following table shows the number of voters preferring various amounts of spending on a new school.
 
-Refer to Table 22-12.Suppose the voters are asked to choose between $0.5 and $2.0.If all voters cast a vote for the spending amount closest to their own preference,how many votes will the $0.5 spending amount receive?

Accepted Answer

A)   33
B)   45
C)   92
D)   114E) None of the above
F) B) and D)

Question 2

Your friend works at a coffee shop on campus and regularly gives away free coffee to you and your friends when you visit.If the owner of the coffee shop wants to stop your friend from giving away coffee,which of the following is not a good approach?

Accepted Answer

A)   Set up a video camera to monitor the shop when the owner is not present.
B)   Pay your friend a wage higher than he could earn elsewhere for the same position.
C)   Pay your friend in advance based on projected revenue each month.
D)   Pay your friend part of his compensation as a monthly bonus based on revenue.E) C) and D)
F) None of the above

Question 3

If A is preferred to B and C is preferred to D,then B must be preferred to C to satisfy transitivity.

Accepted Answer

A) True 
 B)False

Question 4

The moral hazard problem and the desire of firms to lessen that problem serve as a plausible explanation for a firm paying above-equilibrium wages to its workers.

Accepted Answer

A) True 
 B)False

Question 5

Moral hazard and adverse selection are similar asymmetric information problems but moral hazard involves hidden actions while adverse selection involves hidden characteristics.

Accepted Answer

A) True 
 B)False

Question 6

The tendency of many people to procrastinate supports the view that people are consistent over time.

Accepted Answer

A) True 
 B)False

Question 7

Peter was recently hired as a salesman for a national consulting firm.His job involves spending a significant portion of his time out of the office visiting prospects and attending conferences.Which of the following is a strategy the consulting firm may employ to discourage Peter from shirking his responsibilities?

Accepted Answer

A)   Tell Peter that the shareholders want to earn a large profit this year.
B)   Pay Peter commissions on what he sells after the work has been completed.
C)   Allow Peter to set his own schedule and work from home frequently.
D)   Pay Peter a lower wage than he would earn in a similar job at another firm.E) B) and C)
F) C) and D)

Question 8

Most economic models

Accepted Answer

A)   incorporate the assumption of rational behavior on the part of economic actors.
B)   incorporate the notion that people are usually reluctant to change their minds.
C)   are meant to precisely duplicate reality.
D)   assume that people often make sub-optimal choices.E) A) and B)
F) A) and C)

Question 9

Table 22-2
Three longtime friends-Jack,Ryan,and Colin-are deciding how they will spend their Sunday afternoon.They all agree that they should do one of three things: go to a movie,go to the zoo,or go to a museum.They also agree that they will have two pairwise votes to determine how to spend their evening,with the majority determining the outcome on each vote.The first,second,and third choices for each person are as indicated in the table below.
 
-Refer to Table 22-2.Which of the following statements is correct regarding the Condorcet paradox and the results of pairwise voting by Jack,Ryan,and Colin?

Accepted Answer

A)   The paradox implies that pairwise voting never produces transitive preferences,and so the voting by Jack,Ryan,and Colin fails to produce transitive preferences.
B)   The paradox implies that pairwise voting sometimes (but not always) produces transitive preferences,and the voting by Jack,Ryan,and Colin does produce transitive preferences.
C)   The paradox implies that pairwise voting sometimes (but not always) fails to produce transitive preferences,and the voting by Jack,Ryan,and Colin fails to produce transitive preferences.
D)   The paradox does not apply to the case at hand,because Ryan's preferences are not individually transitive.E) None of the above
F) B) and D)

Question 10

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 11

Scenario 22-4
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 Scenario 22-4.Which of the following statements is correct regarding the Condorcet paradox and the results of pairwise voting on how to improve the safety of the intersection?

Accepted Answer

A)   The paradox implies that pairwise voting never produces transitive preferences,and so the voting in the town fails to produce transitive preferences.
B)   The paradox implies that pairwise voting sometimes (but not always) fails to produce transitive preferences,but the voting in the town does produce transitive preferences.
C)   The paradox implies that pairwise voting sometimes (but not always) fails to produce transitive preferences,and the voting in the town fails to produce transitive preferences.
D)   The paradox implies that pairwise voting always produces transitive preferences,and so the voting in the town produces transitive preferences.E) B) and C)
F) B) and D)

Question 12

The Condorcet paradox

Accepted Answer

A)   demonstrates that the order in which one votes on options may influence the outcome.
B)   demonstrates that majority voting by itself may not reveal the outcome that society wants.
C)   disproves Arrow's impossibility theorem.
D)   Both a and b are correct.E) C) and D)
F) A) and C)

Question 13

Which of the following is not correct?

Accepted Answer

A)   An example of adverse selection is man who tries to sell his used car without disclosing that it needs a new transmission.
B)   The "invisible hand" of a free market will always fix the problems of adverse selection and moral hazard.
C)   An employer may try to prevent a moral hazard problem by paying her workers an efficiency wage.
D)   One interpretation of gift giving is that it reflects asymmetric information and signaling.E) A) and B)
F) None of the above

Question 14

An example of an information asymmetry is when a worker knows more than his employer about his work effort.

Accepted Answer

A) True 
 B)False

Question 15

Table 22-16
Citizens in a small town are deciding how best to develop a plot of land at the center of town.They have narrowed the options to: a park,town hall,gas station,restaurant.The voters' preferences are shown in the table below.
 
-Refer to Table 22-16.If the election is conducted by instant runoff,the final two options will be

Accepted Answer

A)   park and restaurant.
B)   restaurant and town hall.
C)   town hall and gas station.
D)   gas station and park.E) B) and C)
F) None of the above

Question 16

When a night watchman only performs two walk-throughs per night when he is being paid to perform five walk-throughs per night,it is an example of

Accepted Answer

A)   both moral hazard and adverse selection.
B)   neither moral hazard nor adverse selection.
C)   moral hazard,but not adverse selection.
D)   adverse selection,but not moral hazard.E) B) and C)
F) None of the above

Question 17

When economists assume that people are rational,they assume that

Accepted Answer

A)   consumers maximize profits.
B)   firms maximize revenues.
C)   consumers maximize utility.
D)   firms maximize output.E) None of the above
F) B) and C)

Question 18

The Condorcet paradox shows that there is no scheme for aggregating individual preferences into a valid set of social preferences.

Accepted Answer

A) True 
 B)False

Question 19

When some people are better informed than others and the imbalance affects the choices they make,economists say there is

Accepted Answer

asymmetric...

Question 20

In corporations,which of the following are principals but not agents?

Accepted Answer

A)   shareholders
B)   the board of directors
C)   managers
D)   workersE) B) and C)
F) A) and D)

Exam 22: Frontiers of Microeconomics

When some people are better informed than others and the imbalance affects the choices they make,economists say there is

Correct Answer
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asymmetric...
View Answer

Correct Answer
verified

The Condorcet paradox shows that there is no scheme for aggregating individual preferences into a valid set of social preferences.

Correct Answer
verified

Correct Answer
verified

The tendency of many people to procrastinate supports the view that people are consistent over time.

Correct Answer
verified

Moral hazard and adverse selection are similar asymmetric information problems but moral hazard involves hidden actions while adverse selection involves hidden characteristics.

Correct Answer
verified

Your friend works at a coffee shop on campus and regularly gives away free coffee to you and your friends when you visit.If the owner of the coffee shop wants to stop your friend from giving away coffee,which of the following is not a good approach?

Correct Answer
verified

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

If A is preferred to B and C is preferred to D,then B must be preferred to C to satisfy transitivity.

Correct Answer
verified

When economists assume that people are rational,they assume that

Correct Answer
verified

Which of the following is not correct?

Correct Answer
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When a night watchman only performs two walk-throughs per night when he is being paid to perform five walk-throughs per night,it is an example of

Correct Answer
verified

Correct Answer
verified

Most economic models

Correct Answer
verified

Correct Answer
verified

In corporations,which of the following are principals but not agents?

Correct Answer
verified

The moral hazard problem and the desire of firms to lessen that problem serve as a plausible explanation for a firm paying above-equilibrium wages to its workers.

Correct Answer
verified

The Condorcet paradox

Correct Answer
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Correct Answer
verified

An example of an information asymmetry is when a worker knows more than his employer about his work effort.

Correct Answer
verified

Exam 22: Frontiers of Microeconomics

When some people are better informed than others and the imbalance affects the choices they make,economists say there is

Correct Answerverifiedasymmetric...View AnswerShow Answer

Correct AnswerverifiedShow Answer

The Condorcet paradox shows that there is no scheme for aggregating individual preferences into a valid set of social preferences.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The tendency of many people to procrastinate supports the view that people are consistent over time.

Correct AnswerverifiedShow Answer

Moral hazard and adverse selection are similar asymmetric information problems but moral hazard involves hidden actions while adverse selection involves hidden characteristics.

Correct AnswerverifiedShow Answer

Your friend works at a coffee shop on campus and regularly gives away free coffee to you and your friends when you visit.If the owner of the coffee shop wants to stop your friend from giving away coffee,which of the following is not a good approach?

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

If A is preferred to B and C is preferred to D,then B must be preferred to C to satisfy transitivity.

Correct AnswerverifiedShow Answer

When economists assume that people are rational,they assume that

Correct AnswerverifiedShow Answer

Which of the following is not correct?

Correct AnswerverifiedShow Answer

When a night watchman only performs two walk-throughs per night when he is being paid to perform five walk-throughs per night,it is an example of

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Most economic models

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

In corporations,which of the following are principals but not agents?

Correct AnswerverifiedShow Answer

The moral hazard problem and the desire of firms to lessen that problem serve as a plausible explanation for a firm paying above-equilibrium wages to its workers.

Correct AnswerverifiedShow Answer

The Condorcet paradox

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

An example of an information asymmetry is when a worker knows more than his employer about his work effort.

Correct AnswerverifiedShow Answer

Correct Answer
verified
asymmetric...
View Answer

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