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Exam 22: Frontiers of Microeconomics

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Question 201

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Juanita is preparing to study for her economics final exam. She tells her friend that she will be happy if she just gets a B, even though she could likely earn an A if she studied harder. Juanita is what Herbert Simon would call a

A) rational maximizer.
B) satisficer.
C) homo economicus.
D) screener.

E) B) and C)
F) All of the above

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Question 202

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Explain the Condorcet paradox. To which type of voting system does it apply?

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The Condorcet paradox applies directly t...

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Question 203

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People tend to wait until deadlines get close to work on projects in part because they believe that they can complete the projects in less time than it will actually take. Which findings from behavioral economics is this observation consistent with?

Table 22-14 Amy, Beth, and Connie are on a hiring committee. They have interviewed 3 candidates identified by their last names and are going to vote on which one is hired. -Refer to Table 22-14. Which results for pairwise voting are correct?

Table 22-11 Five voters must choose from among four options: A, B, C, or D. Each voter's preferences are summarized in the table below. Options higher in the table are more preferred by the voter. -Refer to Table 22-11. If the vote were conducted according to a modified Borda count system where each person's first choice receives 10 points, second choice 5 points, third choice 3 points and fourth choice 1 point, the result would be that

Which of the following is an example of screening?

Most economic models incorporate the assumption of rational behavior on the part of economic actors.

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. Explain why the Condorcet paradox applies to this voting situation.

People interpret evidence to confirm beliefs they already hold. This statement is an example of which of the following systematic mistakes that people make?

Table 22-4 The fortunate residents of Anytown have a budget surplus. The mayor decided that it is only fair to have the residents vote on what to do with the surplus. The mayor has narrowed the options down to three possible projects: a playground, a library, or a swimming pool. The voters fall into three categories and have preferences as illustrated in the table. -Refer to Table 22-4. If the mayor decides to use a Borda count rather than pairwise voting,

Which of the following statements is correct?

Scenario 22-4 Three members of the DiCarlo family, Vinny, Maria, and Franki, are choosing the entree for a large family reunion. Their options are: spaghetti, ravioli, lasagne, and pizza. Vinny prefers spaghetti over lasagne, lasagne over ravioli, and ravioli over pizza. Maria prefers ravioli over spaghetti, spaghetti over pizza, and pizza over lasagne. Frankie prefers pizza over ravioli, ravioli over lasagne, and lasagne over spaghetti. -Refer to Scenario 22-4. Maria recommends using a vote by majority rule and proposes first choosing between spaghetti and lasagne, then choosing between the winner of the first vote and ravioli, and finally choosing between the winner of the second vote and pizza. If everyone votes according to his or her preferences,

The classic example of adverse selection is the market for used cars.

Which of the following is not correct?

Evidence points to the fact that, in the real world, people appear to care about fairness

Which of the following offers an explanation as to why the principal-agent problem exists for a firm?

An example of asymmetric information is when a seller of a house knows more than the buyer about the house's condition.

The two major problems caused by asymmetric information are the moral-hazard problem and the principal-agent problem.

Table 22-10 The town of Franklin is facing a severe budget shortage. The town administrator has proposed four options to balance the budget: increase property taxes (taxes) , cut the school arts budget (arts) , turn off half of the streetlights in the town (streetlights) , reduce police patrols (police) . Exactly one of the four 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 22-10. If the town administrator asks voters to choose first between reducing police patrols and increasing taxes, and then between the winner of the first vote and cutting the school arts budget, and then between the winner of the second vote and turning off half of the streetlights, which choice will win the final vote?

Scenario 22-1 Esteban and Michaela own an apartment building. They hire Nico to manage the building and deal with tenants' complaints. They also hire Ted to make any necessary repairs to the apartments or the common area and they hire Rex to be the door guard at night. -Refer to Scenario 22-1. Which of the following statements is correct?