Question 1

Herbert Simon,one of the first social scientists to work at the boundary of economics and psychology,suggested that humans should be viewed not as rational maximers but as

Accepted Answer

The answer of Herbert Simon,one of the first social scientists...

Question 2

Behavioral economics

Accepted Answer

A)   integrates psychological insights into economic models.
B)   relies on the assumption that homo economicus describes economic decision-making.
C)   assumes that economic agents have full information about the conditions surrounding their decisions.
D)   All of the above are correct.E) All of the above
F) A) and B)

Question 3

Ed promises his wife that he will mow the lawn on Saturday morning,but when Saturday morning arrives he changes his mind and says he will do it on Sunday.What insight about human behavior can be deduced from Ed's decision?

Accepted Answer

People are...

Question 4

Suppose that in a Borda count election,outcome X is preferred to outcome Y,and outcome Y is preferred to outcome Z,when outcomes X,Y,and Z are all available options.When Y is removed as an option,however,outcome Z is preferred to outcome X.This would violate Arrow's assumption that voting systems should satisfy

Accepted Answer

A)   unanimity.
B)   transitivity.
C)   the independence of irrelevant alternatives.
D)   no dictators.E) A) and B)
F) B) and C)

Question 5

Robert and Neal are playing the ultimatum game starting with $100.Based on the coin toss,Robert is the player to propose a division of the $100.If Robert acts as economic theory assumes and Neal acts as experimental evidence shows,Neal will

Accepted Answer

A)   accept Robert's proposal of keeping $99 and offering Neal $1.
B)   accept Robert's proposal of keeping $60 and offering Neal $40.
C)   reject Robert's proposal of keeping $99 and offering Neal $1.
D)   reject Robert's proposal of keeping $60 and offering Neal $40.E) A) and B)
F) All of the above

Question 6

Political leaders are always aiming for an optimal combination of efficiency and equality.

Accepted Answer

A) True 
 B)False

Question 7

Majority rule will produce the outcome most preferred by the median voter.

Accepted Answer

A) True 
 B)False

Question 8

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) C) and D)
F) A) and D)

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

Informational asymmetry is a difference in

Accepted Answer

A)   efficiency.
B)   equality.
C)   relevant knowledge.
D)   signaling.E) A) and B)
F) All of the above

Question 11

Moral hazard occurs when

Accepted Answer

A)   an employer closely monitors an employee.
B)   two people consider a trade with each other and one person has relevant information about some aspect of the product's quality that the other person lacks.
C)   an employee lacks an incentive to promote the best interests of the employer,and the employer cannot observe the actions of the employee.
D)   an employee closely monitors the actions of her employer.E) A) and D)
F) None of the above

Question 12

When markets fail,which of the following is true?

Accepted Answer

A)   Government intervention can always improve outcomes.
B)   Government intervention can potentially improve outcomes.
C)   Government intervention can never improve outcomes.
D)   Markets do not fail.E) B) and D)
F) B) and C)

Question 13

The Latin term caveat emptor,meaning "let the buyer beware," brings to mind the problem of

Accepted Answer

A)   hidden actions.
B)   adverse selection.
C)   principals and agents.
D)   moral hazard.E) B) and C)
F) A) and C)

Question 14

The ultimatum game reveals that

Accepted Answer

A)   it does not make sense to try to maximize profits.
B)   people may have an innate sense of fairness that economic theory does not capture.
C)   offering someone a wildly unfair outcome is usually ok since people tend to make decisions using a "something is better than nothing" philosophy.
D)   Both a and bE) A) and D)
F) C) and D)

Question 15

Explain what is meant by "asymmetric information." Identify and explain the two basic types of problems that arise when there is asymmetric information.

Accepted Answer

Asymmetric information is present when t...

Question 16

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 Italy against Greece and the second vote pits Ireland against the winner of the first vote,then the outcome is as follows:

Accepted Answer

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

Question 17

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

Accepted Answer

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

Question 18

Which of the following is not an example of an adverse selection problem?

Accepted Answer

A)   A homeowner purchases a refrigerator that the seller knows has a history of leaking.
B)   A highly productive worker quits her job after a salary cut knowing that she can make more at a different job.
C)   A major league baseball player performs poorly in his second season after signing a multi-million dollar contract.
D)   A contractor uses low quality materials for construction but charges for higher quality materials.E) A) and D)
F) A) and C)

Question 19

Table 22-7
 
-Refer to Table 22-7.The table shows the most preferred budget of 75 voters.In an election,each voter will select the budget closest to his or her most preferred budget.Using this information,what is the most preferred budget of the median voter?

Accepted Answer

A)   $10
B)   $20
C)   $30
D)   $40E) None of the above
F) C) and D)

Question 20

A community has five voters who are interested in only one issue: the government's spending on local parks.If Andre would like the government to spend $12,000 on parks,Brandon prefers $7,000,Charlene prefers $4,000,Dennis prefers $2,000,and Ernie prefers $0,how much spending would a politician seeking to win the election select when running against one opponent?

Accepted Answer

A)   $2,000
B)   $4,000
C)   $7,000
D)   $12,000E) A) and B)
F) A) and C)

Exam 22: Frontiers of Microeconomics

The ultimatum game reveals that

Correct Answer
verified

Political leaders are always aiming for an optimal combination of efficiency and equality.

Correct Answer
verified

Informational asymmetry is a difference in

Correct Answer
verified

Robert and Neal are playing the ultimatum game starting with $100.Based on the coin toss,Robert is the player to propose a division of the $100.If Robert acts as economic theory assumes and Neal acts as experimental evidence shows,Neal will

Correct Answer
verified

Herbert Simon,one of the first social scientists to work at the boundary of economics and psychology,suggested that humans should be viewed not as rational maximers but as

Correct Answer
verified

Correct Answer
verified

Majority rule will produce the outcome most preferred by the median voter.

Correct Answer
verified

When markets fail,which of the following is true?

Correct Answer
verified

Behavioral economics

Correct Answer
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Which of the following statements is not correct?

Correct Answer
verified

Which of the following is not an example of an adverse selection problem?

Correct Answer
verified

The Latin term caveat emptor,meaning "let the buyer beware," brings to mind the problem of

Correct Answer
verified

Correct Answer
verified

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

Correct Answer
verified

Explain what is meant by "asymmetric information." Identify and explain the two basic types of problems that arise when there is asymmetric information.

Correct Answer
verified
Asymmetric information is present when t...
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Moral hazard occurs when

Correct Answer
verified

Table 22-7 -Refer to Table 22-7.The table shows the most preferred budget of 75 voters.In an election,each voter will select the budget closest to his or her most preferred budget.Using this information,what is the most preferred budget of the median voter?

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified

Ed promises his wife that he will mow the lawn on Saturday morning,but when Saturday morning arrives he changes his mind and says he will do it on Sunday.What insight about human behavior can be deduced from Ed's decision?

Correct Answer
verified
People are...
View Answer

Exam 22: Frontiers of Microeconomics

The ultimatum game reveals that

Correct AnswerverifiedShow Answer

Political leaders are always aiming for an optimal combination of efficiency and equality.

Correct AnswerverifiedShow Answer

Informational asymmetry is a difference in

Correct AnswerverifiedShow Answer

Robert and Neal are playing the ultimatum game starting with $100.Based on the coin toss,Robert is the player to propose a division of the $100.If Robert acts as economic theory assumes and Neal acts as experimental evidence shows,Neal will

Correct AnswerverifiedShow Answer

Herbert Simon,one of the first social scientists to work at the boundary of economics and psychology,suggested that humans should be viewed not as rational maximers but as

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Majority rule will produce the outcome most preferred by the median voter.

Correct AnswerverifiedShow Answer

When markets fail,which of the following is true?

Correct AnswerverifiedShow Answer

Behavioral economics

Correct AnswerverifiedShow Answer

Which of the following statements is not correct?

Correct AnswerverifiedShow Answer

Which of the following is not an example of an adverse selection problem?

Correct AnswerverifiedShow Answer

The Latin term caveat emptor,meaning "let the buyer beware," brings to mind the problem of

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Explain what is meant by "asymmetric information." Identify and explain the two basic types of problems that arise when there is asymmetric information.

Correct AnswerverifiedAsymmetric information is present when t...View AnswerShow Answer

Moral hazard occurs when

Correct AnswerverifiedShow Answer

Table 22-7 -Refer to Table 22-7.The table shows the most preferred budget of 75 voters.In an election,each voter will select the budget closest to his or her most preferred budget.Using this information,what is the most preferred budget of the median voter?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Ed promises his wife that he will mow the lawn on Saturday morning,but when Saturday morning arrives he changes his mind and says he will do it on Sunday.What insight about human behavior can be deduced from Ed's decision?

Correct AnswerverifiedPeople are...View AnswerShow Answer

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Asymmetric information is present when t...
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People are...
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