Question 1

The Condorcet paradox

Accepted Answer

A)  proved that the Arrow impossibility theorem is wrong.
B)  was proved wrong by the Arrow impossibility theorem.
C)  serves as an example of the Arrow impossibility theorem.
D)  pertains to voting systems, whereas Arrow's Impossibility Theorem does not.E) All of the above
F) None of the above

Question 2

Herbert Simon suggested that humans should be viewed not as rational maximizers but as

Accepted Answer

A)  irrational maximizers.
B)  rational minimizers.
C)  irrational minimizers.
D)  satisficers.E) None of the above
F) A) and B)

Question 3

Screening occurs when

Accepted Answer

A)  an informed party acts to reveal his private information.
B)  an informed party acts to conceal his private information.
C)  an uninformed party acts to induce the informed party to reveal private information.
D)  one informed party acts to prevent another informed party from revealing private information.E) A) and B)
F) A) and C)

Question 4

Table 22-6
 
-Refer to Table 22-6.The table shows the preferences of 100 voters over three possible outcomes: X,Y,and Z.Suppose a Borda count election was held among these voters and that the only outcomes from which the voters may choose are outcome X and outcome Z.Which of the following statements is true?

Accepted Answer

A)  While outcome X is preferred to outcome Z when all three choices are available, outcome Z is preferred to outcome X when outcome Y is eliminated as a possible choice.
B)  Outcome X is preferred to outcome Z when all three choices are available, and outcome X is still preferred to outcome Z when outcome Y is eliminated as a possible choice.
C)  While outcome Z is preferred to outcome X when all three choices are available, outcome X is preferred to outcome Z when outcome Y is eliminated as a possible choice.
D)  Outcome Z is preferred to outcome X when all three choices are available, and outcome Z is preferred to outcome X when outcome Y is eliminated as a possible choice.E) None of the above
F) C) and D)

Question 5

Suppose that you major in physics because potential employers perceive that it is harder than other majors.Assuming education has no real value,your majoring in physics provides potential employers with

Accepted Answer

A)  a signal.
B)  a screen.
C)  a potential moral hazard.
D)  a potential adverse selection.E) B) and D)
F) B) and C)

Question 6

John goes to work 8 hours per day,but while he is at work he spends most of his time visiting internet sites that provide him with information on his favorite hobby.This is an example of

Accepted Answer

A)  the Condorcet Paradox.
B)  signaling.
C)  moral hazard.
D)  screening.E) A) and B)
F) B) and D)

Question 7

In the field of study called political economy,economists make use of insights from the field of psychology.

Accepted Answer

A) True 
 B)False

Question 8

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) A) and B)
F) A) and C)

Question 9

Scenario 22-3
The following table shows the preferences for the five voters in a city regarding how to deal with the city's diseased trees.
  
A = do nothing
B = Follow the expert's advice to remove every tree
C = remove every 4th tree now and perhaps more later
D = use an untested spraying alternative
-Refer to Scenario 22-3.Consider the public policy for dealing with the diseased trees.Using pairwise majority voting with A versus B,then the winner of that vote versus C,then the winner of that vote versus D,which policy wins?

Accepted Answer

A)  A
B)  B
C)  C
D)  DE) None of the above
F) A) and B)

Question 10

The Condorcet voting paradox demonstrates that democratic outcomes do not always obey the property of

Accepted Answer

A)  narrowness of preferences.
B)  concavity of preferences.
C)  asymmetry of preferences.
D)  transitivity of preferences.E) A) and D)
F) None of the above

Question 11

Scenario 22-2
Five voters must choose from among four options: W, X, Y, or Z. Each voter's preferences are summarized in the table below. Options higher in the table are more preferred by the voter.
 
-Refer to Scenario 22-2.If the vote were conducted according to a Borda count system where each person's first choice receives 4 points,second choice 3 points,third choice 2 points and fourth choice 1 point,the result would be

Accepted Answer

A)  that W would win.
B)  that Y would win.
C)  that Z would win.
D)  a tie between W and Z.E) All of the above
F) A) and B)

Question 12

Effective signals

Accepted Answer

A)  convey useful information from informed parties to uninformed parties.
B)  impose little or no cost on the signaler.
C)  cannot be conveyed accurately when there is an information asymmetry.
D)  can be used by employers to alleviate the moral hazard problem in the workplace.E) A) and B)
F) B) and C)

Question 13

Assume there are nine voters in a certain small town and let x = the preferred number of dollars spent per person per month on garbage collection.For Voters 1,2,and 3,x = $10;for Voter 4,x = $15;for Voter 5,x = $18;and for Voters 6,7,8 and 9,x = $20.The median voter is

Accepted Answer

A)  Voter 3.
B)  Voter 4.
C)  Voter 5.
D)  Voter 6.E) B) and C)
F) A) and B)

Question 14

A "satisficer" is a person whose decisionmaking is the same as that predicted by mainstream economic models.

Accepted Answer

A) True 
 B)False

Question 15

Which voter is the voter whose views on a policy issue are in the middle of the spectrum,with half of the voters on one side of this voter's view and half on the other side.

Accepted Answer

A)  Average voter
B)  Mean voter
C)  Arrow voter
D)  Median voterE) None of the above
F) A) and C)

Question 16

Researchers have found that the systematic mistakes that people make in their decisionmaking include a lack of confidence in their own abilities.

Accepted Answer

A) True 
 B)False

Question 17

Table 22-5
 
-Refer to Table 22-5.The table shows the preferences of four types of voters over four possible outcomes: W,X,Y,and Z.In addition,the table shows the percentage of voters of each type.Suppose that,for some reason,W is eliminated as a possible option.Using a Borda count election,with 3 points for the best choice,2 points for the second best choice,and 1 point for the last choice,which outcome would win this election?

Accepted Answer

A)  X
B)  Y
C)  Z
D)  There would be a three-way tie.E) B) and C)
F) A) and B)

Question 18

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 their employer.E) A) and B)
F) None of the above

Question 19

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 aboveE) A) and B)
F) A) and C)

Question 20

Table 22-4
 
-Refer to Table 22-4.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) B) and D)

Exam 22: Frontiers of Microeconomics

Correct Answer
verified

Suppose that you major in physics because potential employers perceive that it is harder than other majors.Assuming education has no real value,your majoring in physics provides potential employers with

Correct Answer
verified

Behavioral economics

Correct Answer
verified

In the field of study called political economy,economists make use of insights from the field of psychology.

Correct Answer
verified

Which voter is the voter whose views on a policy issue are in the middle of the spectrum,with half of the voters on one side of this voter's view and half on the other side.

Correct Answer
verified

Correct Answer
verified

Herbert Simon suggested that humans should be viewed not as rational maximizers but as

Correct Answer
verified

The Condorcet paradox

Correct Answer
verified

The Condorcet voting paradox demonstrates that democratic outcomes do not always obey the property of

Correct Answer
verified

John goes to work 8 hours per day,but while he is at work he spends most of his time visiting internet sites that provide him with information on his favorite hobby.This is an example of

Correct Answer
verified

Effective signals

Correct Answer
verified

Assume there are nine voters in a certain small town and let x = the preferred number of dollars spent per person per month on garbage collection.For Voters 1,2,and 3,x = $10;for Voter 4,x = $15;for Voter 5,x = $18;and for Voters 6,7,8 and 9,x = $20.The median voter is

Correct Answer
verified

Screening occurs when

Correct Answer
verified

A "satisficer" is a person whose decisionmaking is the same as that predicted by mainstream economic models.

Correct Answer
verified

Researchers have found that the systematic mistakes that people make in their decisionmaking include a lack of confidence in their own abilities.

Correct Answer
verified

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

Correct Answer
verified

Moral hazard occurs when

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Table 22-4 -Refer to Table 22-4.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

Exam 22: Frontiers of Microeconomics

Correct AnswerverifiedShow Answer

Suppose that you major in physics because potential employers perceive that it is harder than other majors.Assuming education has no real value,your majoring in physics provides potential employers with

Correct AnswerverifiedShow Answer

Behavioral economics

Correct AnswerverifiedShow Answer

In the field of study called political economy,economists make use of insights from the field of psychology.

Correct AnswerverifiedShow Answer

Which voter is the voter whose views on a policy issue are in the middle of the spectrum,with half of the voters on one side of this voter's view and half on the other side.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Herbert Simon suggested that humans should be viewed not as rational maximizers but as

Correct AnswerverifiedShow Answer

The Condorcet paradox

Correct AnswerverifiedShow Answer

The Condorcet voting paradox demonstrates that democratic outcomes do not always obey the property of

Correct AnswerverifiedShow Answer

John goes to work 8 hours per day,but while he is at work he spends most of his time visiting internet sites that provide him with information on his favorite hobby.This is an example of

Correct AnswerverifiedShow Answer

Effective signals

Correct AnswerverifiedShow Answer

Assume there are nine voters in a certain small town and let x = the preferred number of dollars spent per person per month on garbage collection.For Voters 1,2,and 3,x = $10;for Voter 4,x = $15;for Voter 5,x = $18;and for Voters 6,7,8 and 9,x = $20.The median voter is

Correct AnswerverifiedShow Answer

Screening occurs when

Correct AnswerverifiedShow Answer

A "satisficer" is a person whose decisionmaking is the same as that predicted by mainstream economic models.

Correct AnswerverifiedShow Answer

Researchers have found that the systematic mistakes that people make in their decisionmaking include a lack of confidence in their own abilities.

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

Moral hazard occurs when

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Table 22-4 -Refer to Table 22-4.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

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