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Exam 22: Frontiers of Microeconomics

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Question 121

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

A) True
B) False

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Question 122

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The results of the ultimatum game illustrate the fact that

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) Both b and c are correct.

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

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Question 123

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Table 22-5 The 500 voters of Appleton are deciding by majority rule how much to spend on a new library. -Refer to Table 22-5.The median voter prefers to spend

An unhealthy person would likely choose a medical insurance policy with a

Scenario 22-4 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 Scenario 22-4.If the first vote pits a 2-way stop against a 4-way stop and the second vote pits a stoplight against the winner of the first vote,then the outcome is as follows:

According to one survey 76 percent of Americans said they were not saving enough for retirement.This example of inconsistency over time

Table 22-1 Three friends -- Tricia,Sarah,and Katie -- are deciding where to go together for vacation.They all agree that they should go to one of three places: Ireland,Italy,or Greece.They also agree that they will have two pairwise votes to determine where to go on vacation,with the majority determining the outcome on each vote.The first,second,and third choices for each person are as indicated in the table below. -Refer to Table 22-1.Depending on the order of the pairwise voting,

Table 22-4 Five voters must choose from among four options: A,B,C,or D.Each voter's preferences are summarized in the table below.Options higher in the table are more preferred by the voter. -Refer to Table 22-4.If the vote were conducted according to a modified Borda count system where each person's first choice receives 10 points,second choice 5 points,third choice 3 points and fourth choice 1 point,the result would be

Table 22-1 Three friends -- Tricia,Sarah,and Katie -- are deciding where to go together for vacation.They all agree that they should go to one of three places: Ireland,Italy,or Greece.They also agree that they will have two pairwise votes to determine where to go on vacation,with the majority determining the outcome on each vote.The first,second,and third choices for each person are as indicated in the table below. -Refer to Table 22-1.If the first vote pits Ireland against Italy and the second vote pits Greece against the winner of the first vote,then the outcome is as follows:

The median-voter theorem explains why

Which of the following would violate transitivity?

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

Betty knows that she needs to save 20% of her annual income for retirement.However,she spends 90% of her income each year.This is an indication that Betty's preferences are

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.

Joe's Computers builds and sells computers for the local retail market.Since Joe's business does not have the name recognition of some of the bigger computer retailers,Joe advertises a "One-Year Money Back Guarantee" to indicate to buyers that his product is of high quality.This guarantee is an example of

Jason buys automobile insurance from No Wreck Insurance Company.If Jason avoids having an accident for three years,No Wreck will reduce the price he has to pay for his insurance.Nevertheless,he routinely drives fast and with reckless abandon.

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

Table 22-2 Three longtime friends-Fred,Barney,and Wilma-are deciding how they will spend their Sunday afternoon.They all agree that they should do one of three things: go to a movie,go to the beach,or go to a museum.They also agree that they will have two pairwise votes to determine how to spend their evening,with the majority determining the outcome on each vote.The first,second,and third choices for each person are as indicated in the table below. -Refer to Table 22-1.If (1) the first vote pits "museum" against "beach," and (2) the second vote pits "movie" against the winner of the first vote,then

An implication of the median voter theorem is that Republicans and Democrats will try to align their views with those of the median voter.

In economics,a difference in access to relevant knowledge is called a behavioral asymmetry.