Question 1

A safe driver would likely choose an auto insurance policy with a

Accepted Answer

A)   low premium and a high deductible.
B)   high premium and a high deductible.
C)   high premium and a low deductible.
D)   high premium and no deductible.E) B) and D)
F) A) and C)

Question 2

Some studies show the even students who earned high grades in science classes provide disproven explanations for scientific phenomena. These disproven explanations had been acquired prior to the science classes. These studies provide some support for which of the following systematic mistakes that people make?

Accepted Answer

A)   people are overconfident
B)   people give too much weight to a small number of vivid observations
C)   people are reluctant to change their minds
D)   All of the above are correct.E) A) and B)
F) C) and D)

Question 3

Asymmetric information, political economy, and behavioral economics

Accepted Answer

A)   are topics at the frontier of microeconomics.
B)   are topics that economists no longer research.
C)   are being studied as economists try to expand their understanding of human behavior and society.
D)   both a and c are correct.E) A) and C)
F) A) and D)

Question 4

Arrow's impossibility theorem illustrates the difficulties in creating the perfect voting system.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following is not correct?

Accepted Answer

A)   Pairwise voting never produces transitive preferences.
B)   The order of pairwise voting can affect the result.
C)   Majority voting by itself does not tell us what outcome a society really wants.
D)   No voting system can satisfy all of the following properties: unanimity, transitivity, independence of irrelevant alternatives, and no dictators.E) A) and B)
F) A) and C)

Question 6

What is the name of the mathematical result showing that no voting system can simultaneously satisfy the properties of unanimity, transitivity, independence of irrelevant alternatives, and no dictators?

Accepted Answer

A)   The fundamental theorem of behavioral economics
B)   Arrow's impossibility theorem
C)   The fundamental theorem of voting
D)   The median voter theoremE) B) and D)
F) None of the above

Question 7

According to the median voter theorem, majority rule will produce an outcome that is inconsistent with transitive preferences.

Accepted Answer

A) True 
 B)False

Question 8

Table 22-1
Three friends -- Linda, Stephanie, and Jamie -- are deciding where to go together for vacation. They all agree that they should go to one of three places: France, Greece, or Italy. 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 friends change their minds and decide to choose a vacation destination using a Borda count, then

Accepted Answer

A)   the friends will go to France.
B)   the friends will go to Greece.
C)   the friends will go to Italy.
D)   A Borda count will not result in a single winner in this case.E) All of the above
F) A) and B)

Question 9

Effective signals

Accepted Answer

A)   convey useful information from informed parties to uninformed parties.
B)   impose little or no cost on the signaler.
C)   cannot be conveyed accurately when there is an information asymmetry.
D)   raise the quantity sold but reduce the price sellers receive.E) B) and D)
F) None of the above

Question 10

According to behavioral economics, an employee will likely

Accepted Answer

A)   work harder if she is a satisficer and if she believes a coworker is overpaid.
B)   work harder if she is a satisficer, but work less hard if she believes a coworker is overpaid.
C)   work harder if she believes a coworker is overpaid, but work less hard if she is a satisficer.
D)   work less hard if she is a satisficer and if she believes a coworker is overpaid.E) B) and C)
F) A) and C)

Question 11

When some people are better informed than others and the imbalance affects the choices they make, economists say there is

Accepted Answer

asymmetric...

Question 12

Table 22-19
The 600 voters of Appleton are deciding by majority rule how much to spend on a new library. 
-Refer to Table 22-19. The median voter prefers to spend

Accepted Answer

A)   $2 million.
B)   $3 million.
C)   $3.5 million.
D)   $4 million.E) All of the above
F) None of the above

Question 13

Economic theory assumes people are always rational. Yet observation indicates that people do not always behave rationally. Which of the following is not a systematic mistake people make in their decisionmaking?

Accepted Answer

A)   People often interpret information to fit beliefs already held.
B)   People place too much emphasis in their decisionmaking on a few extreme situations of which they are aware.
C)   People tend to view current prices differently than they view future prices.
D)   People are too sure of their own abilities.E) B) and C)
F) A) and D)

Question 14

According to the median voter theorem, majority rule will

Accepted Answer

A)   always produce an inconclusive outcome.
B)   produce the outcome least preferred by the median voter.
C)   produce the outcome most preferred by the median voter.
D)   produce an outcome that is inconsistent with transitive preferences.E) C) and D)
F) None of the above

Question 15

Scenario 22-1
Esteban and Michaela own an apartment building. They hire Nico to manage the building and deal with tenants' complaints. They also hire Ted to make any necessary repairs to the apartments or the common area and they hire Rex to be the door guard at night.
-Refer to Scenario 22-1. Which of the following statements is correct?

Accepted Answer

A)   If Rex falls asleep while he is supposed to be guarding the door, he has created an adverse selection problem.
B)   Esteban and Michaela are the principals and Nico, Ted, and Rex are the agents.
C)   Nico is the principal and Ted and Rex are the agents.
D)   All of the above are correct.E) A) and D)
F) All of the above

Question 16

Which of the following is not correct?

Accepted Answer

A)   Economics is a study of the choices that people make and the resulting interactions they have with one another.
B)   In areas it has already studied, economists have found perfect and unchanging answers.
C)   Economists are trying to expand their understanding of human behavior and society.
D)   The economics of asymmetric information, political economy, and behavioral economics are all topics at the frontier of microeconomics.E) C) and D)
F) A) and D)

Question 17

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.
Voter Type 
-Refer to Table 22-5. If the citizens of Anytown use a Borda count, rather than pairwise majority voting, to decide what to build, then they will build a new

Accepted Answer

A)   library.
B)   recreation center.
C)   arena.
D)   None of the above is correct; a Borda count fails to produce a winner in this instance.E) None of the above
F) All of the above

Question 18

The field of behavioral economics builds a more subtle and complex model of economic behavior using insights from

Accepted Answer

A)   physics.
B)   biology.
C)   psychology.
D)   anthropology.E) All of the above
F) B) and C)

Question 19

Frequently it is the case that: (1)  A worker knows more than his employer about how much effort he puts into his job, and (2)  the seller of a used car knows more than the buyer about the car's condition.

Accepted Answer

A)   Neither (1)  nor (2)  serves as an example of asymmetric information.
B)   Both (1)  and (2)  serve as examples of asymmetric information.
C)   Neither (1)  nor (2)  serves as an example of a hidden action.
D)   Both (1)  and (2)  serve as examples of hidden action.E) B) and D)
F) C) and D)

Question 20

The field of economics that combines the study the psychology of human behavior and economic issues is

Accepted Answer

behavioral...

Exam 22: Frontiers of Microeconomics

Which of the following is not correct?

Correct Answer
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Which of the following is not correct?

Correct Answer
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Correct Answer
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According to the median voter theorem, majority rule will

Correct Answer
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According to the median voter theorem, majority rule will produce an outcome that is inconsistent with transitive preferences.

Correct Answer
verified

When some people are better informed than others and the imbalance affects the choices they make, economists say there is

Correct Answer
verified
asymmetric...
View Answer

Arrow's impossibility theorem illustrates the difficulties in creating the perfect voting system.

Correct Answer
verified

The field of economics that combines the study the psychology of human behavior and economic issues is

Correct Answer
verified
behavioral...
View Answer

Correct Answer
verified

Frequently it is the case that: (1) A worker knows more than his employer about how much effort he puts into his job, and (2) the seller of a used car knows more than the buyer about the car's condition.

Correct Answer
verified

A safe driver would likely choose an auto insurance policy with a

Correct Answer
verified

Economic theory assumes people are always rational. Yet observation indicates that people do not always behave rationally. Which of the following is not a systematic mistake people make in their decisionmaking?

Correct Answer
verified

What is the name of the mathematical result showing that no voting system can simultaneously satisfy the properties of unanimity, transitivity, independence of irrelevant alternatives, and no dictators?

Correct Answer
verified

The field of behavioral economics builds a more subtle and complex model of economic behavior using insights from

Correct Answer
verified

Asymmetric information, political economy, and behavioral economics

Correct Answer
verified

Table 22-19 The 600 voters of Appleton are deciding by majority rule how much to spend on a new library. -Refer to Table 22-19. The median voter prefers to spend

Correct Answer
verified

According to behavioral economics, an employee will likely

Correct Answer
verified

Correct Answer
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Correct Answer
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Effective signals

Correct Answer
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Exam 22: Frontiers of Microeconomics

Which of the following is not correct?

Correct AnswerverifiedShow Answer

Which of the following is not correct?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

According to the median voter theorem, majority rule will

Correct AnswerverifiedShow Answer

According to the median voter theorem, majority rule will produce an outcome that is inconsistent with transitive preferences.

Correct AnswerverifiedShow Answer

When some people are better informed than others and the imbalance affects the choices they make, economists say there is

Correct Answerverifiedasymmetric...View AnswerShow Answer

Arrow's impossibility theorem illustrates the difficulties in creating the perfect voting system.

Correct AnswerverifiedShow Answer

The field of economics that combines the study the psychology of human behavior and economic issues is

Correct Answerverifiedbehavioral...View AnswerShow Answer

Correct AnswerverifiedShow Answer

Frequently it is the case that: (1) A worker knows more than his employer about how much effort he puts into his job, and (2) the seller of a used car knows more than the buyer about the car's condition.

Correct AnswerverifiedShow Answer

A safe driver would likely choose an auto insurance policy with a

Correct AnswerverifiedShow Answer

Economic theory assumes people are always rational. Yet observation indicates that people do not always behave rationally. Which of the following is not a systematic mistake people make in their decisionmaking?

Correct AnswerverifiedShow Answer

What is the name of the mathematical result showing that no voting system can simultaneously satisfy the properties of unanimity, transitivity, independence of irrelevant alternatives, and no dictators?

Correct AnswerverifiedShow Answer

The field of behavioral economics builds a more subtle and complex model of economic behavior using insights from

Correct AnswerverifiedShow Answer

Asymmetric information, political economy, and behavioral economics

Correct AnswerverifiedShow Answer

Table 22-19 The 600 voters of Appleton are deciding by majority rule how much to spend on a new library. -Refer to Table 22-19. The median voter prefers to spend

Correct AnswerverifiedShow Answer

According to behavioral economics, an employee will likely

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Effective signals

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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asymmetric...
View Answer

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behavioral...
View Answer

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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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