Question 1

Table 22-1
Three friends -- Tricia,Sarah,and Katie -- are deciding where to go together for vacation.They all agree that they should go to one of three places: Ireland,Italy,or Greece.They also agree that they will have two pairwise votes to determine where to go on vacation,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 22-1.If the first vote pits Ireland against Greece and the second vote pits Italy against the winner of the first vote,then the outcome is as follows:

Accepted Answer

A)   Ireland wins the first vote and Italy wins the second vote,so they go to Italy.
B)   Ireland wins the first vote and Ireland wins the second vote,so they go to Ireland.
C)   Greece wins the first vote and Greece wins the second vote,so they go to Greece.
D)   Greece wins the first vote and Italy wins the second vote,so they go to Italy.E) B) and C)
F) B) and D)

Question 2

Studies of human decision-making have detected systematic mistakes that people make.Which of the following have been detected?

Accepted Answer

A)   people are overconfident
B)   people give too much weight to a small number of vivid observations
C)   people are reluctant to change their minds
D)   All of the above are correct.E) A) and B)
F) A) and C)

Question 3

Table 22-2
A high school Spanish class and their teacher are planning to take a Spring Break trip abroad but they have to decide where to go.They have narrowed the options to: Spain,Mexico,Ecuador,and Costa Rica.The voters' preferences are shown in the table below.
 
-Refer to Table 22-2.If the election is conducted by instant runoff,the class trip will be to

Accepted Answer

A)   Costa Rica.
B)   Ecuador.
C)   Mexico.
D)   Spain.E) B) and C)
F) C) and D)

Question 4

Rick goes to work 8 hours per day,but while he is at work he spends most of his time visiting internet sites monitoring his fantasy football teams.This is an example of

Accepted Answer

A)   the Condorcet Paradox.
B)   signaling.
C)   moral hazard.
D)   screening.E) None of the above
F) B) and C)

Question 5

Severe adverse-selection problems may result in

Accepted Answer

A)   too few good used cars being offered for sale.
B)   wages that are too low relative to equilibrium levels.
C)   too many good drivers buying too much automobile insurance.
D)   people with average health buying too much health insurance.E) None of the above
F) B) and C)

Question 6

Table 22-1
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.
 
-Refer to Table 22-1.If the town administrator asks voters to choose first between basketball and football and then between the winner of the first vote and hockey,which sport will win the final vote?

Accepted Answer

The answer of Table 22-1
The citizens of Mayville are having...

Question 7

Some of the systematic mistakes that people make include

Accepted Answer

A)   being overconfident.
B)   placing too much weight on events that are more vivid compared to those with greater statistical probability.
C)   being generally unwilling to change their minds.
D)   All of the above are correct.E) All of the above
F) B) and D)

Question 8

Table 22-4
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 22-4.Which pairwise voting scheme would result in outcome B?

Accepted Answer

A)   First,choose between A and B.Second,voters choose between the winner of the first vote and C.Third,voters choose between the winner of the second vote and D.
B)   First,choose between B and C.Second,voters choose between the winner of the first vote and A.Third,voters choose between the winner of the second vote and D.
C)   First,choose between B and D.Second,voters choose between the winner of the first vote and C.Third,voters choose between the winner of the second vote and A.
D)   First,choose between C and D.Second,voters choose between the winner of the first vote and A.Third,voters choose between the winner of the second vote and B.E) None of the above
F) C) and D)

Question 9

In his 1951 book,Social Choice and Individual Values,Kenneth Arrow defined a "perfect" voting system.That system includes which of the following features?

Accepted Answer

A)   unanimity
B)   transitivity
C)   absence of a dictator
D)   All of the above are correct.E) B) and C)
F) B) and D)

Question 10

Which of the following is an example of screening?

Accepted Answer

A)   When someone is applying for a job,the employer checks references to determine the previous work habits of the applicant.
B)   When an employee purchases group life insurance without taking a physical exam,she knows more about her health than does the insurance company.
C)   When someone is considering buying a used car from a dealership,the seller knows the repair history of the car but the potential buyer does not.
D)   All of the above are correct.E) B) and D)
F) None of the above

Question 11

The field of political economy

Accepted Answer

A)   applies the methods of political science to microeconomics.
B)   applies the methods of political science to macroeconomics.
C)   is relevant to the issue of how active government should be in economic matters.
D)   integrates psychological insights to better understand individual choices.E) A) and C)
F) A) and B)

Question 12

The Condorcet paradox demonstrates that the result of a majority vote may be affected by

Accepted Answer

A)   moral hazard.
B)   adverse selection.
C)   the order of the votes.
D)   All of the above are correct.E) None of the above
F) C) and D)

Question 13

Under majority rule,the order in which items are voted on is

Accepted Answer

A)   unimportant,and this is a lesson of the Condorcet paradox.
B)   unimportant,and this is a lesson of Arrow's impossibility theorem.
C)   important,and this is a lesson of the Condorcet paradox.
D)   important,and this is a lesson of Arrow's impossibility theorem.E) B) and D)
F) None of the above

Question 14

Your city newspaper publishes a "Best of" poll that lists its readers' favorite restaurants.Mundo Bar and Grill is ranked as the best casual restaurant.Your best friend had dinner at Mundo Bar and Grill last week and commented that the food was mediocre and the service was slow.You decide not to have dinner at Mundo Bar and Grill based on your friend's experience.Your decision illustrates that people

Accepted Answer

A)   are reluctant to change their minds.
B)   are overconfident.
C)   give too much weight to a small number of vivid observations.
D)   are satisficers.E) A) and B)
F) A) and C)

Question 15

Evidence from experiments in which real people play the ultimatum game supports the idea that people

Accepted Answer

A)   are rational wealth-maximizers.
B)   tend to be driven by fairness,without regard for their own self-interest.
C)   are driven by both fairness and self-interest.
D)   have trouble calculating their own levels of wealth.E) A) and C)
F) B) and D)

Question 16

Bob is planning to sell his home.In preparation for the sale,he paints all of the ceilings in his house to cover up water stains from his leaking roof so that potential buyers will be unaware of this problem.This is an example of

Accepted Answer

A)   moral hazard.
B)   screening.
C)   adverse selection.
D)   the principal-agent problem.E) C) and D)
F) B) and D)

Question 17

Suppose that an economics department is offering a student exchange program with a university in Giessen,Germany.If the department requires students to submit an essay in order to be considered for the program,the essay may be an example of a(n)

Accepted Answer

A)   signal.
B)   screen.
C)   efficiency wage.
D)   principal.E) B) and D)
F) B) and C)

Question 18

Which of the following is an example of informational asymmetry?

Accepted Answer

A)   A seller of a house knows more about its true condition than does a potential buyer.
B)   A salesperson knows more about her efforts than does her manager.
C)   A child knows more about how much time he spent playing video games while he was alone in his bedroom than do his parents.
D)   All of the above are correct.E) None of the above
F) All of the above

Question 19

Normally,we expect voters' preferences to exhibit a property called

Accepted Answer

A)   transitivity.
B)   transversality.
C)   normality.
D)   universality.E) B) and C)
F) A) and D)

Question 20

Which of the following is not an example of a principal trying to solve the moral-hazard problem?

Accepted Answer

A)   the principal conducts an extensive interview of the agent
B)   the principal installs hidden cameras to monitor the agent's behavior
C)   the principal pays the agent efficiency wages
D)   the principal pays the agent a year-end bonusE) None of the above
F) B) and C)

Exam 22: Frontiers of Microeconomics

Correct Answer
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The Condorcet paradox demonstrates that the result of a majority vote may be affected by

Correct Answer
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The field of political economy

Correct Answer
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Bob is planning to sell his home.In preparation for the sale,he paints all of the ceilings in his house to cover up water stains from his leaking roof so that potential buyers will be unaware of this problem.This is an example of

Correct Answer
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Some of the systematic mistakes that people make include

Correct Answer
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Correct Answer
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Rick goes to work 8 hours per day,but while he is at work he spends most of his time visiting internet sites monitoring his fantasy football teams.This is an example of

Correct Answer
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Under majority rule,the order in which items are voted on is

Correct Answer
verified

Correct Answer
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Studies of human decision-making have detected systematic mistakes that people make.Which of the following have been detected?

Correct Answer
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In his 1951 book,Social Choice and Individual Values,Kenneth Arrow defined a "perfect" voting system.That system includes which of the following features?

Correct Answer
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Evidence from experiments in which real people play the ultimatum game supports the idea that people

Correct Answer
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Severe adverse-selection problems may result in

Correct Answer
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Which of the following is an example of screening?

Correct Answer
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Which of the following is not an example of a principal trying to solve the moral-hazard problem?

Correct Answer
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Normally,we expect voters' preferences to exhibit a property called

Correct Answer
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Which of the following is an example of informational asymmetry?

Correct Answer
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Suppose that an economics department is offering a student exchange program with a university in Giessen,Germany.If the department requires students to submit an essay in order to be considered for the program,the essay may be an example of a(n)

Correct Answer
verified

Correct Answer
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Table 22-4 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 22-4.Which pairwise voting scheme would result in outcome B?

Correct Answer
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Exam 22: Frontiers of Microeconomics

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The Condorcet paradox demonstrates that the result of a majority vote may be affected by

Correct AnswerverifiedShow Answer

The field of political economy

Correct AnswerverifiedShow Answer

Bob is planning to sell his home.In preparation for the sale,he paints all of the ceilings in his house to cover up water stains from his leaking roof so that potential buyers will be unaware of this problem.This is an example of

Correct AnswerverifiedShow Answer

Some of the systematic mistakes that people make include

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Rick goes to work 8 hours per day,but while he is at work he spends most of his time visiting internet sites monitoring his fantasy football teams.This is an example of

Correct AnswerverifiedShow Answer

Under majority rule,the order in which items are voted on is

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Studies of human decision-making have detected systematic mistakes that people make.Which of the following have been detected?

Correct AnswerverifiedShow Answer

In his 1951 book,Social Choice and Individual Values,Kenneth Arrow defined a "perfect" voting system.That system includes which of the following features?

Correct AnswerverifiedShow Answer

Evidence from experiments in which real people play the ultimatum game supports the idea that people

Correct AnswerverifiedShow Answer

Severe adverse-selection problems may result in

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Which of the following is an example of screening?

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Which of the following is not an example of a principal trying to solve the moral-hazard problem?

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Normally,we expect voters' preferences to exhibit a property called

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Which of the following is an example of informational asymmetry?

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Suppose that an economics department is offering a student exchange program with a university in Giessen,Germany.If the department requires students to submit an essay in order to be considered for the program,the essay may be an example of a(n)

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Table 22-4 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 22-4.Which pairwise voting scheme would result in outcome B?

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