Question 1

Table 22-11
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 22-11. 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 that

Accepted Answer

A)   A would win.
B)   B would win.
C)   C would win.
D)   D would win.E) None of the above
F) A) and B)

Question 2

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. If Mr. Johnson wants to ensure that his 1st choice becomes the family's winning destination, he should propose

Accepted Answer

A)   using a vote by majority rule and 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)   using a vote by majority rule and 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)   using a vote by majority rule and 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)   using a Borda count.E) A) and C)
F) B) and D)

Question 3

The Latin term caveat emptor, meaning "let the buyer beware," brings to mind the problem of

Accepted Answer

A)   hidden actions.
B)   adverse selection.
C)   principals and agents.
D)   moral hazard.E) All of the above
F) C) and D)

Question 4

Table 22-18
The following table shows the preferences of four types of voters over four possible alternatives as well as the percentage of the electorate with the given preferences. 
-Refer to Table 22-18. Suppose before any voting takes place that alternative W is eliminated as an option. If the voters first choose between alternatives X and Y in a majority vote, with the winner of that vote going against option Z in a majority vote, which alternative would win?

Accepted Answer

A)   X
B)   Y
C)   Z
D)   There would be no clear winner - alternatives X and Y would tie.E) B) and C)
F) A) and C)

Question 5

Adverse selection may lead to

Accepted Answer

A)   owners of used cars choosing to keep them rather than sell them at the low price that skeptical buyers are willing to pay.
B)   wages being stuck above the level that balances supply and demand, resulting in unemployment.
C)   buyers with low risk choosing to remain uninsured because the policies they are offered fail to reflect their true characteristics.
D)   All of the above are correct.E) None of the above
F) C) and D)

Question 6

Table 22-21
The following table shows the number of voters preferring various amounts of spending to develop a river to make it more attractive for canoeing and kayaking. 
-Refer to Table 22-21. The city council is considering two alternative ballots. The first would allow voters to choose between $1.5 million and $2 million. The second would allow voters to select between $2 million and $2.5 million. If the first ballot is used,

Accepted Answer

A)   voters will select $1.5 million. If the second ballot is used voters will select $2 million.
B)   voters will select $1.5 million. If the second ballot is used voters will select $2.5 million.
C)   voters will select $2 million. If the second ballot is used voters will select $2 million.
D)   voters will select $2 million. If the second ballot is used voters will select $2.5 millionE) B) and D)
F) B) and C)

Question 7

Economic policy that appears to be ideal in an economics textbook may not be the final policy that is approved by elected politicians because

Accepted Answer

A)   sometimes a politician's self interest may conflict with the national interest.
B)   economics professors have a notoriously low voting rate.
C)   only policies advocated by the President's Council of Economic Advisors receive enough national attention to interest politicians.
D)   Economists cannot explain why politicians do not implement the ideas from their textbooks.E) A) and D)
F) B) and D)

Question 8

Table 22-2
Three longtime friends-Allen, Brian, and Cody-are deciding how they will spend their Sunday afternoon. They all agree that they should do one of three things: go to a movie, play golf, or go to a baseball game. They also agree that they will have two pairwise votes to determine how to spend their afternoon, 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 22-2. If (1)  the first vote pits "baseball game" against "movie," and (2)  the second vote pits "golf" against the winner of the first vote, then the outcome is as follows:

Accepted Answer

A)   "Baseball game" wins the first vote and "baseball game" wins the second vote, so they go to a baseball game.
B)   "Baseball game" wins the first vote and "golf" wins the second vote, so they go to the golf.
C)   "Movie" wins the first vote and "movie" wins the second vote, so they go to a movie.
D)   "Movie" wins the first vote and "golf" wins the second vote, so they play golf.E) C) and D)
F) B) and C)

Question 9

Which of the following is an example of satisficing behavior?

Accepted Answer

A)   You continue studying for your economics exam until you believe you'll get a score that's good enough.
B)   You spend time looking over the lettuce at the grocery store in order to make sure you get the best head of lettuce.
C)   You clean your room to the point where you think it's clean enough that further time can be used for more productive purposes.
D)   You carefully plan your day in order to get "the most out of life."E) C) and D)
F) All of the above

Question 10

Kenneth Arrow proved that the voting system that satisfied all of the properties of his "perfect" voting system was

Accepted Answer

A)   one in which a single person (a "dictator")  imposes his preferences on everyone else.
B)   pairwise majority voting.
C)   majority voting that is not pairwise.
D)   None of the above is correct. Arrow proved that no voting system can satisfy all of the properties of his "perfect" system.E) C) and D)
F) A) and B)

Question 11

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

Accepted Answer

A)   Voter 3.
B)   Voter 4.
C)   Voter 5.
D)   Voter 6.E) A) and B)
F) A) and C)

Question 12

Normally, we expect voters' preferences to exhibit a property called

Accepted Answer

A)   transitivity.
B)   transversality.
C)   normality.
D)   universality.E) C) and D)
F) None of the above

Question 13

Table 22-18
The following table shows the preferences of four types of voters over four possible alternatives as well as the percentage of the electorate with the given preferences. 
-Refer to Table 22-18. In a majority vote between alternatives W and X, what percentage of the votes would W receive?

Accepted Answer

A)   35%
B)   45%
C)   55%
D)   65%E) None of the above
F) A) and B)

Question 14

Which of the following is a plausible explanation for a firm paying above-equilibrium wages to its workers?

Accepted Answer

A)   It increases the probability that a worker who shirks will be caught.
B)   It discourages workers from shirking out of fear of losing their high-paying job.
C)   The Condorcet Paradox suggests that paying high wages will result in greater effort by employees.
D)   By paying a high wage, employers solve this adverse selection problem and motivate the employees to work harder.E) A) and C)
F) B) and C)

Question 15

Which of the following is an example of asymmetric information?

Accepted Answer

A)   When someone is applying for a job, the employer checks references to determine the previous work habits of the applicant.
B)   When an employee purchases group life insurance without taking a physical exam, she knows more about her health than does the insurance company.
C)   When someone is considering buying a used car from a dealership, the potential buyer requests documentation of the repair history of the car.
D)   All of the above are correct.E) B) and C)
F) A) and D)

Question 16

Economic theory assumes that voters, politicians, and other political participants are largely motivated by

Accepted Answer

A)   personal self-interest.
B)   altruism.
C)   a desire to promote the general welfare.
D)   a desire to promote allocative economic efficiency.E) A) and C)
F) A) and D)

Question 17

A community has five voters who are interested in only one issue: the government's spending on local parks. If Andre would like the government to spend $12,000 on parks, Brandon prefers $7,000, Charlene prefers $4,000, Dennis prefers $2,000, and Ernie prefers $0, how much spending would a politician seeking to win the election select when running against one opponent?

Accepted Answer

A)   $2,000
B)   $4,000
C)   $7,000
D)   $12,000E) B) and C)
F) A) and D)

Question 18

Peter was recently hired as a salesman for a national consulting firm. His job involves spending a significant portion of his time out of the office visiting prospects and attending conferences. His firm is paying him a wage that is higher than the equilibrium wage, but he receives much of his income in quarterly bonuses based on how much he sells.

Accepted Answer

A)   The consulting firm is trying to prevent adverse selection with its compensation strategy.
B)   Peter has an incentive to go golfing with his buddies rather than conducting sales meetings.
C)   The consulting firm is responding to the moral hazard problem with its compensation strategy.
D)   Peter should quit this job and take a job where he gets paid an equilibrium wage more frequently.E) All of the above
F) A) and D)

Question 19

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

Accepted Answer

she gets $...

Question 20

Adverse selection is

Accepted Answer

A)   the tendency of a person who is imperfectly monitored to engage in dishonest or otherwise undesirable behavior.
B)   an action taken by an uninformed party to induce an informed party to reveal information.
C)   the failure of majority voting to produce transitive preferences for society.
D)   the tendency for the mix of unobserved attributes to become undesirable from the standpoint of an uninformed party.E) A) and D)
F) A) and B)

Exam 22: Frontiers of Microeconomics

Kenneth Arrow proved that the voting system that satisfied all of the properties of his "perfect" voting system was

Correct Answer
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Correct Answer
verified

Economic theory assumes that voters, politicians, and other political participants are largely motivated by

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Adverse selection is

Correct Answer
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Normally, we expect voters' preferences to exhibit a property called

Correct Answer
verified

The Latin term caveat emptor, meaning "let the buyer beware," brings to mind the problem of

Correct Answer
verified

Economic policy that appears to be ideal in an economics textbook may not be the final policy that is approved by elected politicians because

Correct Answer
verified

Table 22-18 The following table shows the preferences of four types of voters over four possible alternatives as well as the percentage of the electorate with the given preferences. -Refer to Table 22-18. In a majority vote between alternatives W and X, what percentage of the votes would W receive?

Correct Answer
verified

Which of the following is an example of satisficing behavior?

Correct Answer
verified

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

Correct Answer
verified
she gets $...
View Answer

Adverse selection may lead to

Correct Answer
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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 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

Correct Answer
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Correct Answer
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Which of the following is an example of asymmetric information?

Correct Answer
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Which of the following is a plausible explanation for a firm paying above-equilibrium wages to its workers?

Correct Answer
verified

Exam 22: Frontiers of Microeconomics

Kenneth Arrow proved that the voting system that satisfied all of the properties of his "perfect" voting system was

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Economic theory assumes that voters, politicians, and other political participants are largely motivated by

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Adverse selection is

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Normally, we expect voters' preferences to exhibit a property called

Correct AnswerverifiedShow Answer

The Latin term caveat emptor, meaning "let the buyer beware," brings to mind the problem of

Correct AnswerverifiedShow Answer

Economic policy that appears to be ideal in an economics textbook may not be the final policy that is approved by elected politicians because

Correct AnswerverifiedShow Answer

Table 22-18 The following table shows the preferences of four types of voters over four possible alternatives as well as the percentage of the electorate with the given preferences. -Refer to Table 22-18. In a majority vote between alternatives W and X, what percentage of the votes would W receive?

Correct AnswerverifiedShow Answer

Which of the following is an example of satisficing behavior?

Correct AnswerverifiedShow Answer

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

Correct Answerverifiedshe gets $...View AnswerShow Answer

Adverse selection may lead to

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following is an example of asymmetric information?

Correct AnswerverifiedShow Answer

Which of the following is a plausible explanation for a firm paying above-equilibrium wages to its workers?

Correct AnswerverifiedShow Answer

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she gets $...
View Answer

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