FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 22: Frontiers of Microeconomics

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 151

Multiple Choice

Review LaterAdd Note

Review Later

If the median voter theorem holds,

A) a Borda count will violate the principle of transitivity.
B) the Condorcet paradox also holds.
C) minority views will not receive much consideration.
D) All of the above are correct.

E) A) and D)
F) B) and C)

Correct Answer

verified

Show Answer

Question 152

Multiple Choice

Review LaterAdd Note

Review Later

Bill owns a small business in Milwaukee.He travels frequently,meeting with important customers,and attending conferences.Bill hired Nicole to work in the Milwaukee office as the day-to-day general manager of the business.

A) This is a moral hazard problem since Nicole may not work as hard as Bill would like when she is not monitored.
B) Bill choosing to hire Nicole is an example of adverse selection since it is possible that Nicole will not work as hard as Bill expects.
C) Bill will most likely pay Nicole a lower salary than normal since Bill will not be there to monitor Nicole's work effort,and since Nicole will not likely work hard knowing Bill cannot monitor her effort.
D) The Condorcet Paradox implies that Nicole will not work as hard as Bill would like even though he will likely pay her an above equilibrium wage.

E) None of the above
F) B) and C)

Correct Answer

verified

Show Answer

Question 153

Short Answer

Review LaterAdd Note

Lindsay and Tim are playing the ultimatum game starting with $100.Based on the coin toss,Lindsay is the player to propose a division of the $100.If Lindsay acts as economic theory assumes,she should propose that

Table 22-10 Three family members -- Seamus,Maeve,and Siobhan -- are deciding what type of movie to attend.The three choices are an action adventure,comedy,or horror.The first,second,and third choices for each person are as indicated in the table below. -Refer to Table 22-10.Suppose the three decide to make the decision based on pairwise majority voting.If they first choose between Action and Comedy and then choose between the winner of the first vote and Horror,which movie alternative will win?

Table 22-13 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 22-13.If the mayor decides to use a Borda count rather than pairwise voting,

Students of microeconomic principles often say they are going to study "tonight," because the only way to pass the exam is to study some every night.When "tonight" comes,some students choose to do something else.Come exam day,these students do not do well on their exam.This observation is an example of how people

The field of economics that combines the study the psychology of human behavior and economic issues is

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.What is the preferred spending amount of the median voter?

Scenario 22-2 A wireless telephone service provider offers three service plans to its consumers. -Refer to Scenario 22-2.By offering consumers these choices and allowing them to select the plan that best meets their needs,the wireless service provider is engaging in

Asymmetric information,political economy,and behavioral economics

The adverse selection problem is a likely explanation for the fact that

Which of the following is not an example of a principal-agent relationship?

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?

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

The unanimity property states that the ranking between any two outcomes should not depend on whether some third outcome is available.

Insurance companies charge annual premiums to collect revenue,which they then use to pay customers who file claims for damages they incur.Because of the moral hazard problem insurance companies separate customers into groups.Group 1: customers who file few claims & Group 2: customers that file a lot of claims.After creating these groups,what happens to the average annual premium within a group?

Adverse selection may lead to

Herbert Simon suggested that people are not rational maximizers but satisficers,meaning that they choose a course of action that is

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.When the mayor asks the residents to choose between a stoplight and a 4-way stop,the residents choose a 4-way stop.Then,when the mayor asks them to choose between a 4-way stop and a 2-way stop,they choose a 2-way stop.However,if the mayor firsts asks the residents to choose between a 4-way stop and a 2-way stop,they choose a 2-way stop.Then,when the mayor asks the residents to choose between a 2-way stop and a stoplight,they choose a stoplight.What does this example illustrate?

A life insurance company requires new applicants to have a medical exam prior to writing the insurance policy.This requirement is an example of