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Exam 22: Frontiers in Microeconomics

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Question 41

Multiple Choice

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Arrow's impossibility theorem shows that no voting system can satisfy which of the following properties?

A) unanimity and transitivity only
B) transitivity and independence of irrelevant alternatives only
C) no dictators and transitivity only
D) unanimity, transitivity, independence of irrelevant alternatives, and no dictators

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

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Question 42

Multiple Choice

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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. Based on these preferences, which of these dollar amounts will win over any one of the others?

A) $10.
B) $15.
C) $18
D) $20.

E) All of the above
F) A) and B)

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Question 43

Multiple Choice

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Which of the following is not an example of asymmetric information?

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 vote were conducted according to a Borda count system where each person's first choice receives 3 points, second choice 2 points, and third choice 1 point, the result would be

Table 22-25 Sophie, Huan, and Santiago are lost with no map or GPS available. They come to an intersection at which they can turn left, turn right, or continue going straight. Their preferences are summarized in the table. -Refer to Table 22-25. The travelers decide to conduct pairwise voting with the majority determining the outcome of each vote to decide their next move. If they first choose between going left and going straight, and then choose between the winner of the first vote and going right, which direction will they go?

Table 22-9 -Refer to Table 22-9. The table shows the preferences of four types of voters over four possible outcomes: A, B, C, and D. In addition, the table shows the percentage of voters of each type. Suppose a Borda count election is held in which each voter ranks the four outcomes, giving 1 point to last place, 2 points to second to last, 3 points to the second best, and 4 points to the best. In this case, which outcome would win?

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

Based on studies of human decision making, many people care more about the fairness of a game than about their personal winnings.

People interpret evidence to confirm beliefs they already hold. This statement is an example of which of the following systematic mistakes that people make?

Table 22-15 Diane, Henry, and Linda are voting for who to promote. They can only promote one candidate. Their preferences are given in the table below. -Refer to Table 22-15. If elections were held where voters choose either Fred or Beth, and then choose either the winner or Mary, what would the results be?

Based on the studies of human decision making, which of the following statements is correct?

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

The field of political economy applies the methods of

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 3, and 4, x = $10; for Voter 5, x = $15; for Voter , x = $18; and for Voters 6, 7, 8 and 9, x = $20. The median voter is

The problem that results from an agent, who is imperfectly monitored by the principal, engaging in dishonest or otherwise undesirable behavior is called

When an individual purchases health insurance and knows more about her family medical history than the insurance company, this is an example of adverse selection​.​

Table 22-24 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 22-24. If the town administrator asks voters to choose first between hockey and basketball and then between the winner of the first vote and football, which sport will win the final vote?

Riley travels a great deal, and over the past several years he has read dozens of reviews of hotel chains, all of which rave about the clean rooms and great service at Comeon Inns. Last month, Riley checked into a room at a Comeon Inn for the first time, only to find the room filthy and the service lousy. He decided the Comeon Inn chain is inferior to other hotel chains.

Table 22-24 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 22-24. 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?

Which of the following offers an explanation as to why the principal-agent problem exists for a firm?