Question 1

Table 22-19
The 600 voters of Appleton are deciding by majority rule how much to spend on a new library. 
-Refer to Table 22-19. If an election were held between spending $2 million and $4 million, the median voter would vote for

Accepted Answer

A)  $2 million and $2 million would win.
B)  $2 million and $3 million would win.
C)  $4 million and $2 million would win.
D)  $4 million and $4 million would win.E) B) and D)
F) None of the above

Question 2

Which of the following would be an example of a principal trying to deal with a moral hazard problem?

Accepted Answer

A)  The parents of an infant secretly place video cameras in their house before the baby-sitter arrives.
B)  An insurance company checks police records to determine if its policyholders have received traffic citations.
C)  An employer examines his workers' output on a daily basis.
D)  All of the above are correct.E) A) and D)
F) B) and C)

Question 3

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,

Accepted Answer

A)  the swimming pool will win.
B)  the library will win.
C)  the playground will win.
D)  the results will be the same as with pairwise voting.E) B) and C)
F) All of the above

Question 4

Screening is an action taken by an uninformed party to induce an informed party to reveal information.

Accepted Answer

A) True 
 B)False

Question 5

Scenario 22-6
​
Shana owns a boutique that sells high-end women's clothing and accessories. Katie works part-time at the boutique and frequently is the only employee in this small store. Shana pays Katie a wage that is higher than the market wage for this type of job. When the store is not full of customers, Katie diligently works on displays and cleans to keep the store looking its best. Belinda is a customer in the store who asks Katie's opinion on the quality of some jeans she is considering purchasing. Katie tells her the quality is great even though she's had several other customers return them due to flaws. Magda is another customer who is returning a necklace without volunteering that a gem is missing.
-Refer to Scenario 22-6. What is the name for the problem Katie creates by lying about the quality of the jeans?

Accepted Answer

The answer of Scenario 22-6
​
Shana owns a boutique that sells...

Question 6

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

Accepted Answer

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

Question 7

​​When a principal attempts to get an agent to reveal his or her private information, which of the following is occurring?

Accepted Answer

A)  ​Screening
B)  ​Signalling
C)  ​Moral hazard
D)  ​Adverse selectionE) All of the above
F) A) and C)

Question 8

​Economists have found that entrepreneurs are likely to have subjective beliefs about the probability of entrepreneurial success that are higher than the actual objective probabilities. These beliefs are most closely related to which of the following behavior concepts?

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)  ​People are inconsistent over time.E) A) and C)
F) All of the above

Question 9

People are willing to give up monetary rewards to promote fairness.​

Accepted Answer

A) True 
 B)False

Question 10

The Condorcet voting paradox applies to situations in which voters

Accepted Answer

A)  decide between exactly two possible outcomes.
B)  decide among more than two possible outcomes.
C)  as a group have transitive preferences.
D)  choose the inferior candidate even though the majority preferred the better candidate.E) None of the above
F) All of the above

Question 11

​A car mechanic knowing more about what's wrong with your vehicle than you do is best explained by which of the following concepts:

Accepted Answer

A)  ​Asymmetric information
B)  ​Adverse selection
C)  ​Availability bias
D)  ​Bounded rationalityE) None of the above
F) B) and D)

Question 12

Table 22-7
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. The voters are divided into three groups based on their preferences.
Voter Type 
-Refer to Table 22-7. If the first vote pits a stoplight against a 4-way stop and the second vote pits a 2-way stop against the winner of the first vote, then the outcome is as follows:

Accepted Answer

A)  4-way stop wins the first vote and 4-way stop wins the second vote, so the town installs a 4-way stop.
B)  4-way stop wins the first vote and 2-way stop wins the second vote, so the town installs a 2-way stop.
C)  Stoplight wins the first vote and stoplight wins the second vote, so the town installs a stoplight.
D)  Stoplight wins the first vote and 2-way stop wins the second vote, so the town installs a 2-way stop.E) A) and D)
F) None of the above

Question 13

How have insights from the field of psychology influenced the thinking of economists in recent years?

Accepted Answer

Insights from psychology have led some e...

Question 14

Table 22-16
The Johnson family is planning a vacation and, though Mr. and Mrs. Johnson will be paying for the trip, they have decided to use a democratic voting process to choose their destination. The family members' preferences are reflected in the table below. 
-Refer to Table 22-16. Mr. Johnson recommends using a vote by majority rule and proposes first choosing between Opryland and the Grand Canyon, then choosing between the winner of the first vote and Sea World, and finally choosing between the winner of the second vote and Disneyland. If everyone votes according to their preferences,

Accepted Answer

A)  the winner of the first vote will be Opryland, the winner of the second vote will be Sea World, and the winner of the final vote will be Disneyland.
B)  the winner of the first vote will be Grand Canyon, the winner of the second vote will be Grand Canyon, and the winner of the final vote will be Disneyland.
C)  the winner of the first vote will be Grand Canyon, the winner of the second vote will be Sea World, and the winner of the final vote will be Disneyland.
D)  the winner of the first vote will be Grand Canyon, the winner of the second vote will be Grand Canyon, and the winner of the final vote will be Grand Canyon.E) B) and C)
F) All of the above

Question 15

Adverse selection

Accepted Answer

A)  occurs when the overall quality of choices facing a consumer is very low.
B)  is a greater problem for employees than employers.
C)  occurs more frequently in the market for new cars than used cars.
D)  is not easily remedied by free markets.E) A) and B)
F) C) and D)

Question 16

The results of the ultimatum game illustrate that

Accepted Answer

A)  people's behavior is often driven by an innate sense of fairness.
B)  homo economicus is a good description of people's behavior.
C)  self-interest brings out the most efficient economic outcome.
D)  people will always prefer a small gain to no gain.E) A) and B)
F) A) and C)

Question 17

A Principles of Microeconomics professor wants to know how much prior knowledge her students have before beginning the class so she gives them a pre-test. This action is an example of

Accepted Answer

A)  signaling.
B)  screening.
C)  adverse selection.
D)  moral hazard.E) C) and D)
F) B) and C)

Question 18

Life insurance companies usually require applicants to have physicals and disclose information on their health. This practice is designed to address

Accepted Answer

A)  a principal-agent problem.
B)  a moral-hazard problem.
C)  a problem involving hidden characteristics.
D)  all of the above are correct.E) A) and B)
F) B) and D)

Question 19

Experiments show that when real people play the ultimatum game, starting with $100,

Accepted Answer

A)  Player A usually proposes giving Player B more than $50.
B)  Player B usually accepts Player A's proposal if Player A proposes giving Player B $30 or $40.
C)  players show themselves to be rational wealth-maximizers.
D)  Player B will usually demand an even split.E) A) and D)
F) B) and C)

Question 20

Table 22-16
The Johnson family is planning a vacation and, though Mr. and Mrs. Johnson will be paying for the trip, they have decided to use a democratic voting process to choose their destination. The family members' preferences are reflected in the table below. 
-Refer to Table 22-16. Mr. Johnson recommends using a vote by majority rule. If he wants to ensure that his 1st choice becomes the family's winning destination, he should propose

Accepted Answer

A)  first choosing between Opryland and the Grand Canyon, then choosing between the winner of the first vote and Sea World, and finally choosing between the winner of the second vote and Disneyland.
B)  first choosing between Disneyland and Sea World, then choosing between the winner of the first vote and the Grand Canyon and finally choosing between the winner of the second vote and the Opryland.
C)  first choosing between Sea World and the Grand Canyon, then choosing between the winner of the first vote and Disneyland, and finally choosing between the winner of the second vote and Opryland.
D)  first choosing between Opryland and Disneyland, then choosing between the winner of the first vote and the Grand Canyon, and finally choosing between the winner of the second vote and Sea World.E) B) and D)
F) A) and C)

Exam 22: Frontiers in Microeconomics

How have insights from the field of psychology influenced the thinking of economists in recent years?

Correct Answer
verified
Insights from psychology have led some e...
View Answer

Economists have found that entrepreneurs are likely to have subjective beliefs about the probability of entrepreneurial success that are higher than the actual objective probabilities. These beliefs are most closely related to which of the following behavior concepts?

Correct Answer
verified

Adverse selection

Correct Answer
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Correct Answer
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A car mechanic knowing more about what's wrong with your vehicle than you do is best explained by which of the following concepts:

Correct Answer
verified

A Principles of Microeconomics professor wants to know how much prior knowledge her students have before beginning the class so she gives them a pre-test. This action is an example of

Correct Answer
verified

The results of the ultimatum game illustrate that

Correct Answer
verified

Screening is an action taken by an uninformed party to induce an informed party to reveal information.

Correct Answer
verified

Which of the following would be an example of a principal trying to deal with a moral hazard problem?

Correct Answer
verified

Life insurance companies usually require applicants to have physicals and disclose information on their health. This practice is designed to address

Correct Answer
verified

People are willing to give up monetary rewards to promote fairness.

Correct Answer
verified

Correct Answer
verified

When a principal attempts to get an agent to reveal his or her private information, which of the following is occurring?

Correct Answer
verified

Correct Answer
verified

The Condorcet voting paradox applies to situations in which voters

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified

Experiments show that when real people play the ultimatum game, starting with $100,

Correct Answer
verified

Correct Answer
verified

Table 22-19 The 600 voters of Appleton are deciding by majority rule how much to spend on a new library. -Refer to Table 22-19. If an election were held between spending $2 million and $4 million, the median voter would vote for

Correct Answer
verified

Exam 22: Frontiers in Microeconomics

How have insights from the field of psychology influenced the thinking of economists in recent years?

Correct AnswerverifiedInsights from psychology have led some e...View AnswerShow Answer

​Economists have found that entrepreneurs are likely to have subjective beliefs about the probability of entrepreneurial success that are higher than the actual objective probabilities. These beliefs are most closely related to which of the following behavior concepts?

Correct AnswerverifiedShow Answer

Adverse selection

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

​A car mechanic knowing more about what's wrong with your vehicle than you do is best explained by which of the following concepts:

Correct AnswerverifiedShow Answer

A Principles of Microeconomics professor wants to know how much prior knowledge her students have before beginning the class so she gives them a pre-test. This action is an example of

Correct AnswerverifiedShow Answer

The results of the ultimatum game illustrate that

Correct AnswerverifiedShow Answer

Screening is an action taken by an uninformed party to induce an informed party to reveal information.

Correct AnswerverifiedShow Answer

Which of the following would be an example of a principal trying to deal with a moral hazard problem?

Correct AnswerverifiedShow Answer

Life insurance companies usually require applicants to have physicals and disclose information on their health. This practice is designed to address

Correct AnswerverifiedShow Answer

People are willing to give up monetary rewards to promote fairness.​

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

​​When a principal attempts to get an agent to reveal his or her private information, which of the following is occurring?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The Condorcet voting paradox applies to situations in which voters

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Experiments show that when real people play the ultimatum game, starting with $100,

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Table 22-19 The 600 voters of Appleton are deciding by majority rule how much to spend on a new library. -Refer to Table 22-19. If an election were held between spending $2 million and $4 million, the median voter would vote for

Correct AnswerverifiedShow Answer

Correct Answer
verified
Insights from psychology have led some e...
View Answer

Economists have found that entrepreneurs are likely to have subjective beliefs about the probability of entrepreneurial success that are higher than the actual objective probabilities. These beliefs are most closely related to which of the following behavior concepts?

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

A car mechanic knowing more about what's wrong with your vehicle than you do is best explained by which of the following concepts:

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

People are willing to give up monetary rewards to promote fairness.

Correct Answer
verified

Correct Answer
verified

When a principal attempts to get an agent to reveal his or her private information, which of the following is occurring?

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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