Question 1

Suppose that an economics department is offering a student exchange program with a university in Giessen, Germany. If the department requires students to submit an essay in order to be considered for the program, the essay may be an example of

Accepted Answer

A)   signaling.
B)   screening.
C)   monitoring.
D)   principal.E) C) and D)
F) All of the above

Question 2

Recent developments in political economy

Accepted Answer

A)   render much of the traditional field of political science obsolete.
B)   render much of the traditional field of economics obsolete.
C)   illustrate the resolute nature of democracy.
D)   point to the fact that government is a less-than-perfect institution.E) All of the above
F) B) and C)

Question 3

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 Allen, Brian, and Cody use a Borda count, rather than pairwise majority voting, to decide how to spend their afternoon, then they will

Accepted Answer

A)   watch a movie.
B)   play golf.
C)   watch a baseball game.
D)   None of the above is correct; a Borda count fails to produce a winner in this instance.E) A) and B)
F) B) and D)

Question 4

Scenario 22-2
A wireless telephone service provider offers three service plans to its consumers. 
-Refer to Scenario 22-2. By offering consumers these choices, the wireless telephone provider is

Accepted Answer

A)   signaling to customers that they offer great customer service.
B)   screening customers to reveal how much they plan to use the service.
C)   creating asymmetric information because only the firm knows the true cost of the service.
D)   engaging in a principal-agent problemE) None of the above
F) C) and D)

Question 5

Economists have found that asymmetric information is not very prevalent.

Accepted Answer

A) True 
 B)False

Question 6

In his 1951 book, Social Choice and Individual Values, Kenneth Arrow used the term "transitivity" to mean

Accepted Answer

A)   A beats B only if everyone prefers A to B.
B)   if everyone prefers A to B, then A beats B.
C)   if A beats B and B beats C, then A must beat C.
D)   everyone who is eligible to vote must vote; otherwise, the outcome is invalid.E) C) and D)
F) A) and D)

Question 7

Herbert Simon suggested that people are not rational maximizers but satisficers, meaning that they choose a course of action that is

Accepted Answer

A)   personally satisfying, with a greater emphasis on personal consumption than on fairness.
B)   socially satisfying, with a greater emphasis on fairness than on personal consumption.
C)   good enough.
D)   risk averse.E) C) and D)
F) All of the above

Question 8

Studies show that during the March Madness college basketball tournament, the productivity of the average company in the US falls considerably. This is an example of

Accepted Answer

A)   the Condorcet Paradox.
B)   signaling.
C)   moral hazard.
D)   screening.E) B) and C)
F) A) and D)

Question 9

Scenario 22-6
Shana owns a boutique that sells high­end women's clothing and accessories. Katie works part-time at the boutique and frequently is the only employee in this small store. Shana pays Katie a wage that is higher than the market wage for this type of job. When the store is not full of customers, Katie diligently works on displays and cleans to keep the store looking its best. Belinda is a customer in the store who asks Katie's opinion on the quality of some jeans she is considering purchasing. Katie tells her the quality is great even though she's had several other customers return them due to flaws. Magda is another customer who is returning a necklace without volunteering that a gem is missing.
-Refer to Scenario 22-6. Suppose Shana is tired of all of the problems with the brand of jeans she carries and decides to carry a different, higher quality brand instead. She is concerned that her customers will not trust the quality of the new brand so she offers a 60 day money-back guarantee. The action taken by Shana is called

Accepted Answer

The answer of Scenario 22-6
Shana owns a boutique that sells...

Question 10

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.

Accepted Answer

A)   Average voter
B)   Mean voter
C)   Modal voter
D)   Median voterE) None of the above
F) All of the above

Question 11

Suppose that residents of a town are asked to vote on the best day to improve the safety of an intersection. The three choices are: a stoplight, a 4-way stop, and a 2-way stop. The mayor asks the residents to assign 3 points to their first choice, 2 points to their second choice, and 1 point to their last choice. The intersection will be controlled by the method that receives the most points. This voting scheme is called

Accepted Answer

A)   Arrow's impossibility theorem.
B)   the Condorcet paradox.
C)   a Borda count.
D)   the median voter theorem.E) B) and D)
F) A) and B)

Question 12

Which of the following frontier areas of economics incorporates some findings from psychology into the study of economic issues?

Accepted Answer

A)   asymmetric information
B)   political economy
C)   behavioral economics
D)   public economicsE) None of the above
F) B) and C)

Question 13

Based on studies of human decision making, many people care more about the fairness of a game than about their personal winnings.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following is not a common response to the moral hazard problem that employers face?

Accepted Answer

A)   offering all employees some funding for additional education
B)   paying efficiency wages
C)   requiring employees to provide itemized receipts for reimbursable expenses
D)   paying year-end bonuses rather than higher monthly earningsE) B) and D)
F) None of the above

Question 15

Refer to Narrative 22-1. Which of the ladies is an agent?

Accepted Answer

A)   Shana
B)   Katie
C)   Belinda
D)   MagdaE) None of the above
F) A) and C)

Question 16

The Condorcet paradox tells us that, even though it is impossible to satisfy all of Arrow's properties of a desirable voting system, pairwise majority voting will always satisfy transitivity.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following statements is not correct?

Accepted Answer

A)   The median voter theorem explains why politicians appeal to the middle of the voting distribution.
B)   Based on studies of human decision making, most people prefer to procrastinate, both in the immediate future and in the distant future.
C)   Screening refers to an uninformed party trying to extract information from an informed party.
D)   Advertising can be an example of a company signaling the quality of its products.E) None of the above
F) A) and B)

Question 18

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 A?

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

Question 19

Brittany decides to save $50 from each paycheck so that she can go on a Spring Break trip with her college roommates. However, when she gets paid this week, she spends all of her money on new clothes. Which of the following insights into human behavior does Brittany exhibit?

Accepted Answer

A)   People are overconfident.
B)   People care about fairness.
C)   People are reluctant to change their minds.
D)   People are inconsistent over time.E) B) and C)
F) A) and D)

Question 20

Based on the studies of human decision making, which of the following statements is correct?

Accepted Answer

A)   Most people are not bothered by perceived unfairness as long as they receive some compensation, even if the amount is very small.
B)   Most people are very willing to change their minds.
C)   Many people's preferences are inconsistent over time.
D)   All of the above are correct.E) All of the above
F) C) and D)

Exam 22: Frontiers of Microeconomics

Which of the following is not a common response to the moral hazard problem that employers face?

Correct Answer
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Scenario 22-2 A wireless telephone service provider offers three service plans to its consumers. -Refer to Scenario 22-2. By offering consumers these choices, the wireless telephone provider is

Correct Answer
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Correct Answer
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Suppose that an economics department is offering a student exchange program with a university in Giessen, Germany. If the department requires students to submit an essay in order to be considered for the program, the essay may be an example of

Correct Answer
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In his 1951 book, Social Choice and Individual Values, Kenneth Arrow used the term "transitivity" to mean

Correct Answer
verified

Herbert Simon suggested that people are not rational maximizers but satisficers, meaning that they choose a course of action that is

Correct Answer
verified

Refer to Narrative 22-1. Which of the ladies is an agent?

Correct Answer
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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.

Correct Answer
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Which of the following frontier areas of economics incorporates some findings from psychology into the study of economic issues?

Correct Answer
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Economists have found that asymmetric information is not very prevalent.

Correct Answer
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Based on the studies of human decision making, which of the following statements is correct?

Correct Answer
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Brittany decides to save $50 from each paycheck so that she can go on a Spring Break trip with her college roommates. However, when she gets paid this week, she spends all of her money on new clothes. Which of the following insights into human behavior does Brittany exhibit?

Correct Answer
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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 A?

Correct Answer
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Correct Answer
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Based on studies of human decision making, many people care more about the fairness of a game than about their personal winnings.

Correct Answer
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Which of the following statements is not correct?

Correct Answer
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Recent developments in political economy

Correct Answer
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Studies show that during the March Madness college basketball tournament, the productivity of the average company in the US falls considerably. This is an example of

Correct Answer
verified

The Condorcet paradox tells us that, even though it is impossible to satisfy all of Arrow's properties of a desirable voting system, pairwise majority voting will always satisfy transitivity.

Correct Answer
verified

Exam 22: Frontiers of Microeconomics

Which of the following is not a common response to the moral hazard problem that employers face?

Correct AnswerverifiedShow Answer

Scenario 22-2 A wireless telephone service provider offers three service plans to its consumers. -Refer to Scenario 22-2. By offering consumers these choices, the wireless telephone provider is

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Suppose that an economics department is offering a student exchange program with a university in Giessen, Germany. If the department requires students to submit an essay in order to be considered for the program, the essay may be an example of

Correct AnswerverifiedShow Answer

In his 1951 book, Social Choice and Individual Values, Kenneth Arrow used the term "transitivity" to mean

Correct AnswerverifiedShow Answer

Herbert Simon suggested that people are not rational maximizers but satisficers, meaning that they choose a course of action that is

Correct AnswerverifiedShow Answer

Refer to Narrative 22-1. Which of the ladies is an agent?

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedShow Answer

Which of the following frontier areas of economics incorporates some findings from psychology into the study of economic issues?

Correct AnswerverifiedShow Answer

Economists have found that asymmetric information is not very prevalent.

Correct AnswerverifiedShow Answer

Based on the studies of human decision making, which of the following statements is correct?

Correct AnswerverifiedShow Answer

Brittany decides to save $50 from each paycheck so that she can go on a Spring Break trip with her college roommates. However, when she gets paid this week, she spends all of her money on new clothes. Which of the following insights into human behavior does Brittany exhibit?

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 A?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Based on studies of human decision making, many people care more about the fairness of a game than about their personal winnings.

Correct AnswerverifiedShow Answer

Which of the following statements is not correct?

Correct AnswerverifiedShow Answer

Recent developments in political economy

Correct AnswerverifiedShow Answer

Studies show that during the March Madness college basketball tournament, the productivity of the average company in the US falls considerably. This is an example of

Correct AnswerverifiedShow Answer

The Condorcet paradox tells us that, even though it is impossible to satisfy all of Arrow's properties of a desirable voting system, pairwise majority voting will always satisfy transitivity.

Correct AnswerverifiedShow Answer

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