Question 1

Arrow's impossibility theorem shows that it is impossible to find a better voting system than pairwise majority voting.

Accepted Answer

A) True 
 B)False

Question 2

Behavioral economics

Accepted Answer

A)   integrates psychological insights into economic models.
B)   relies on the assumption that homo economicus describes economic decision-making.
C)   assumes that economic agents have full information about the conditions surrounding their decisions.
D)   All of the above are correct.E) A) and B)
F) All of the above

Question 3

In the case of a moral-hazard problem, which of the following is not a way for the principal to encourage the agent to act more responsibly? The principal could

Accepted Answer

A)   better monitor the agent.
B)   pay the agent above-equilibrium wages.
C)   delay payment to the agent.
D)   stop paying bonuses.E) A) and D)
F) A) and C)

Question 4

The Condorcet paradox shows that

Accepted Answer

A)   allocations of resources based on majority rule are always inefficient.
B)   problems in counting votes can negate legitimate democratic outcomes.
C)   the order on which things are voted can affect the result.
D)   transitive preferences are inconsistent with rationality.E) C) and D)
F) A) and D)

Question 5

Scenario 22-3
At issue in a particular city vote is how much to spend, per person, on road repair next year. Among the 10,000 voters, 2,900 prefer to spend $500 per person, but no more; 2,200 prefer to spend $600 per person, but no more; 1,900 prefer to spend $800 per person, but no more; 1,600 prefer to spend $1,200 but no more, and 1,400 prefer to spend $1,400 per person, but no more.
-Refer to Scenario 22-3. The median voter is one who prefers to spend

Accepted Answer

A)   $500.
B)   $600.
C)   $800.
D)   None of the above are correct.E) None of the above
F) All of the above

Question 6

The results of the ultimatum game illustrate the fact 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)   Both b and c are correct.E) B) and C)
F) A) and D)

Question 7

Suppose a group of people read an article on capital punishment. Prior to reading the article, 60% of the members of the group were opposed to capital punishment, while 40% of the members of the group were in favor of capital punishment. According to studies of human decision-making, which of the following is likely?

Accepted Answer

A)   After reading the article, all members of the group oppose capital punishment.
B)   After reading the article, all members of the group are in favor of capital punishment.
C)   After reading the article, 60% of the members of the group are opposed and 40% of the members of the group are in favor of capital punishment.
D)   The members of the group would elect a representative in favor of capital punishment.E) B) and C)
F) A) and B)

Question 8

Frank is given the choice between pizza and hotdogs and chooses pizza. Then, before serving him, his host tells Franks he could have a hamburger. Frank says he wants a hot dog. Which of the properties of Arrow's impossibility theorem does Frank violate?

Accepted Answer

Independen...

Question 9

When each voter has a most-preferred outcome for the expenditure on a particular government program, majority rule will produce the outcome

Accepted Answer

A)   preferred by the mean (average)  voter.
B)   preferred by the median voter.
C)   that causes the political party in power to increase its power.
D)   defined by Arrow's Impossibility Theorem.E) A) and C)
F) A) and B)

Question 10

Evidence from studies of workers' choices on whether to participate in 401(k)  plans suggests that the workers' behavior appears to exhibit

Accepted Answer

A)   indifference.
B)   ignorance.
C)   inertia.
D)   indecision.E) B) and C)
F) All of the above

Question 11

Informational asymmetry may apply to a hidden action or hidden characteristic where the informed party may be reluctant to reveal relevant information.

Accepted Answer

A) True 
 B)False

Question 12

Herbert Simon, one of the first social scientists to combine the study of economics and psychology, suggested that humans should be viewed as

Accepted Answer

A)   rational maximizers.
B)   satisficers.
C)   independent thinkers.
D)   signalers.E) A) and B)
F) B) and C)

Question 13

Borda count is a voting method often used in polls that rank sports teams.

Accepted Answer

A) True 
 B)False

Question 14

The proposal to place a tax on soda is intended to address what insight about human behavior?

Accepted Answer

People are...

Question 15

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. Which pairwise voting scheme would result in outcome D?

Accepted Answer

A)   First, choose between A and B. Second, voters choose between the winner of the first vote and C. Third, voters choose between the winner of the second vote and D.
B)   First, choose between B and D. Second, voters choose between the winner of the first vote and C. Third, voters choose between the winner of the second vote and A.
C)   First, choose between C and D. Second, voters choose between the winner of the first vote and A. Third, voters choose between the winner of the second vote and B.
D)   First, choose between C and D. Second, voters choose between the winner of the first vote and B. Third, voters choose between the winner of the second vote and A.E) All of the above
F) A) and B)

Question 16

In corporations, which of the following are agents but not principals?

Accepted Answer

A)   shareholders
B)   the board of directors
C)   managers
D)   workersE) B) and C)
F) C) and D)

Question 17

One property of Kenneth Arrow's "perfect" voting system is that the ranking between any two outcomes A and B should not depend on whether some third outcome C is also available. Arrow called this property

Accepted Answer

A)   transitivity.
B)   pairwise perfection.
C)   independence of irrelevant alternatives.
D)   irrelevance of social choices.E) A) and B)
F) A) and C)

Question 18

Which of the following is not an example of a principal trying to solve the moral-hazard problem? The principal

Accepted Answer

A)   calls the agent's references.
B)   installs hidden cameras to monitor the agent's behavior.
C)   pays the agent efficiency wages.
D)   pays the agent a year-end bonus.E) B) and D)
F) All of the above

Question 19

The temptation of imperfectly-monitored workers to shirk their responsibilities is

Accepted Answer

A)   an example of the moral hazard problem.
B)   an example of the adverse selection problem.
C)   an example of screening.
D)   an example of signaling.E) C) and D)
F) A) and D)

Question 20

Which of the following sets of preferences can not satisfy the property of transitivity?

Accepted Answer

A)   Plan A is preferred to plan D. Plan D is preferred to plan B. Plan C is preferred to plan B.
B)   Plan A is preferred to plan B. Plan B is preferred to plan C. Plan A is preferred to plan C.
C)   Plan C is preferred to plan A. Plan B is preferred to plan A. Plan C is preferred to plan B.
D)   Plan D is preferred to plan C. Plan C is preferred to plan B. Plan B is preferred to plan D.E) A) and B)
F) A) and C)

Exam 22: Frontiers of Microeconomics

Behavioral economics

Correct Answer
verified

Herbert Simon, one of the first social scientists to combine the study of economics and psychology, suggested that humans should be viewed as

Correct Answer
verified

The proposal to place a tax on soda is intended to address what insight about human behavior?

Correct Answer
verified
People are...
View Answer

In corporations, which of the following are agents but not principals?

Correct Answer
verified

Arrow's impossibility theorem shows that it is impossible to find a better voting system than pairwise majority voting.

Correct Answer
verified

In the case of a moral-hazard problem, which of the following is not a way for the principal to encourage the agent to act more responsibly? The principal could

Correct Answer
verified

Which of the following sets of preferences can not satisfy the property of transitivity?

Correct Answer
verified

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. Which pairwise voting scheme would result in outcome D?

Correct Answer
verified

Correct Answer
verified

Frank is given the choice between pizza and hotdogs and chooses pizza. Then, before serving him, his host tells Franks he could have a hamburger. Frank says he wants a hot dog. Which of the properties of Arrow's impossibility theorem does Frank violate?

Correct Answer
verified
Independen...
View Answer

When each voter has a most-preferred outcome for the expenditure on a particular government program, majority rule will produce the outcome

Correct Answer
verified

Informational asymmetry may apply to a hidden action or hidden characteristic where the informed party may be reluctant to reveal relevant information.

Correct Answer
verified

One property of Kenneth Arrow's "perfect" voting system is that the ranking between any two outcomes A and B should not depend on whether some third outcome C is also available. Arrow called this property

Correct Answer
verified

Correct Answer
verified

Evidence from studies of workers' choices on whether to participate in 401(k) plans suggests that the workers' behavior appears to exhibit

Correct Answer
verified

The temptation of imperfectly-monitored workers to shirk their responsibilities is

Correct Answer
verified

The results of the ultimatum game illustrate the fact that

Correct Answer
verified

The Condorcet paradox shows that

Correct Answer
verified

Borda count is a voting method often used in polls that rank sports teams.

Correct Answer
verified

Which of the following is not an example of a principal trying to solve the moral-hazard problem? The principal

Correct Answer
verified

Exam 22: Frontiers of Microeconomics

Behavioral economics

Correct AnswerverifiedShow Answer

Herbert Simon, one of the first social scientists to combine the study of economics and psychology, suggested that humans should be viewed as

Correct AnswerverifiedShow Answer

The proposal to place a tax on soda is intended to address what insight about human behavior?

Correct AnswerverifiedPeople are...View AnswerShow Answer

In corporations, which of the following are agents but not principals?

Correct AnswerverifiedShow Answer

Arrow's impossibility theorem shows that it is impossible to find a better voting system than pairwise majority voting.

Correct AnswerverifiedShow Answer

In the case of a moral-hazard problem, which of the following is not a way for the principal to encourage the agent to act more responsibly? The principal could

Correct AnswerverifiedShow Answer

Which of the following sets of preferences can not satisfy the property of transitivity?

Correct AnswerverifiedShow Answer

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. Which pairwise voting scheme would result in outcome D?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Frank is given the choice between pizza and hotdogs and chooses pizza. Then, before serving him, his host tells Franks he could have a hamburger. Frank says he wants a hot dog. Which of the properties of Arrow's impossibility theorem does Frank violate?

Correct AnswerverifiedIndependen...View AnswerShow Answer

When each voter has a most-preferred outcome for the expenditure on a particular government program, majority rule will produce the outcome

Correct AnswerverifiedShow Answer

Informational asymmetry may apply to a hidden action or hidden characteristic where the informed party may be reluctant to reveal relevant information.

Correct AnswerverifiedShow Answer

One property of Kenneth Arrow's "perfect" voting system is that the ranking between any two outcomes A and B should not depend on whether some third outcome C is also available. Arrow called this property

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Evidence from studies of workers' choices on whether to participate in 401(k) plans suggests that the workers' behavior appears to exhibit

Correct AnswerverifiedShow Answer

The temptation of imperfectly-monitored workers to shirk their responsibilities is

Correct AnswerverifiedShow Answer

The results of the ultimatum game illustrate the fact that

Correct AnswerverifiedShow Answer

The Condorcet paradox shows that

Correct AnswerverifiedShow Answer

Borda count is a voting method often used in polls that rank sports teams.

Correct AnswerverifiedShow Answer

Which of the following is not an example of a principal trying to solve the moral-hazard problem? The principal

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
People are...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Independen...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified