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Exam 22: Frontiers in Microeconomics

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Question 201

Multiple Choice

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Table 22-5 The citizens of Anytown will decide whether to build a new library, a recreation center, or an arena. 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 22-5. Which of the following statements is correct?

A) In a pairwise election, "arena" beats "library."
B) In a pairwise election, "library" beats "recreation center."
C) In a pairwise election, "recreation center" beats "arena."
D) All of the above are correct.

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

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Question 202

Multiple Choice

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Scenario 22-4 ​ Three members of the DiCarlo family, Vinny, Maria, and Franki, are choosing the entree for a large family reunion. Their options are: spaghetti, ravioli, lasagne, and pizza. Vinny prefers spaghetti over lasagne, lasagne over ravioli, and ravioli over pizza. Maria prefers ravioli over spaghetti, spaghetti over pizza, and pizza over lasagne. Frankie prefers pizza over ravioli, ravioli over lasagne, and lasagne over spaghetti. -Refer to Scenario 22-4. Vinny recommends using a vote by majority rule and wants to be sure that his first choice becomes the winner. Which order should he should propose to use for pairwise voting to ensure his desired outcome?

A) first choosing between ravioli and spaghetti, then choosing between the winner of the first vote and pizza, and finally choosing between the winner of the second vote and lasagne
B) first choosing between pizza and spaghetti, then choosing between the winner of the first vote and lasagne, and finally choosing between the winner of the second vote and ravioli
C) first choosing between lasagne and pizza, then choosing between the winner of the first vote and ravioli, and finally choosing between the winner of the second vote and spaghetti
D) None of the proposed voting orders will result in Vinny's first choice winning the vote.

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

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Question 203

Multiple Choice

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Table 22-14 Amy, Beth, and Connie are on a hiring committee. They have interviewed 3 candidates identified by their last names and are going to vote on which one is hired. ' -Refer to Table 22-14. Adams calls and says she's accepted another position. In which case does Campbell win against Brown?

"Signaling" refers to actions by an informed party for the sole purpose of

The tendency of many people to procrastinate supports the view that people are consistent over time.

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

An implication of the median voter theorem is that

In the employer-worker relationship, the employer is regarded as the "principal" and the worker is regarded as the "agent."

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 right, and then choose between the winner of the first vote and going straight, which direction will they go?

Anthony and Addie are playing the ultimatum game, starting with $100. The coin flip results in Anthony being the one to propose a division of the $100. Anthony proposes that he gets $99 and Addie gets $1. Which of the following statements is correct?

Adverse selection can only occur when there is asymmetric information​.

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

​Real estate agents have been found to keep their own homes on the market longer and sell their homes for more than comparable homes of the individuals they represent. This phenomenon is best described by which of the following concepts?

A home has been on the market for an extended amount of time without much interest from buyers. The sellers decide to purchase and include a home warranty insuring against major defects with the home. The warranty is an example of a(n)

Scenario 22-4 ​ Three members of the DiCarlo family, Vinny, Maria, and Franki, are choosing the entree for a large family reunion. Their options are: spaghetti, ravioli, lasagne, and pizza. Vinny prefers spaghetti over lasagne, lasagne over ravioli, and ravioli over pizza. Maria prefers ravioli over spaghetti, spaghetti over pizza, and pizza over lasagne. Frankie prefers pizza over ravioli, ravioli over lasagne, and lasagne over spaghetti. -Refer to Scenario 22-4. If, before any votes were cast, ravioli was eliminated from the choices and 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 election winner would be

Which of the following statements is not correct?

Which of the following statements is correct?

If the median voter theorem holds,

Jane spends 85% of her income each year, even though she knows she should be saving 20% for retirement. Jane's behavior indicates that her behavior tends to be

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