Question 1

Condorcet explained his paradox in a 1951 book called Social Choice and Individual Values.

Accepted Answer

A) True 
 B)False

Question 2

When Republicans and Democrats offer similar platforms in an election campaign,a likely explanation is the

Accepted Answer

A)  Arrow impossibility theorem.
B)  Condorcet paradox.
C)  median voter theorem.
D)  fact that politicians are more interested in the national interest than their own self-interest.E) A) and B)
F) A) and C)

Question 3

One of the things that employers can do to lessen the moral hazard problem involving their employees is to pay them in advance for their work.

Accepted Answer

A) True 
 B)False

Question 4

Assume there are two major political parties: the Conservatives and the Liberals.What does the median voter theorem imply about the nature of the platforms (that is,policy stances)of the Conservatives and Liberals?

Accepted Answer

The median voter theorem implies that po...

Question 5

When asymmetric information affects a relationship between two parties,it is always the case that

Accepted Answer

A)  neither party is well informed.
B)  one party is better informed than the other party.
C)  both parties are equally well informed.
D)  the government is better informed than either of the two parties.E) A) and C)
F) A) and B) B

Question 6

Table 22-1
Three longtime friends-Sam, Diane, and Cliff-are deciding how they will spend their Saturday evening. They all agree that they should do one of three things: go to a movie, go to a concert, or go out to dinner. 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 "dinner" against "concert," and (2) the second vote pits "movie" against the winner of the first vote,then

Accepted Answer

A)  "Dinner" wins the first vote and "dinner" wins the second vote, so they go to dinner.
B)  "Dinner" wins the first vote and "movie" wins the second vote, so they go to a movie.
C)  "Concert" wins the first vote and "concert" wins the second vote, so they go to a concert.
D)  "Concert" wins the first vote and "movie" wins the second vote, so they go to a movie.E) A) and B)
F) A) and C)

Question 7

Table 22-2
The citizens of Paradoxopolis will decide whether to build a new school, build a new park, or build a new road. 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.
 
-Refer to Table 22-2.Which of the following statements is correct?

Accepted Answer

A)  In a pairwise election, "school" beats "road."
B)  In a pairwise election, "road" beats "park."
C)  In a pairwise election, "school" beats "park."
D)  All of the above are correct.E) A) and C)
F) B) and C)

Question 8

Explain what is meant by "asymmetric information." Identify and explain the two basic types of problems that arise when there is asymmetric information.

Accepted Answer

Asymmetric information is present when t...

Question 9

Evidence from experiments in which real people play the ultimatum game supports the idea that people care about fairness as well as about maximization of their personal wealth.

Accepted Answer

A) True 
 B)False

Question 10

Scenario 22-2
Five voters must choose from among four options: W, X, Y, or Z. Each voter's preferences are summarized in the table below. Options higher in the table are more preferred by the voter.
 
-Refer to Scenario 22-2.Which pairwise voting scheme would result in outcome Z?

Accepted Answer

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

Question 11

People interpret evidence to confirm beliefs they already hold.This statement is an example of which of the following systematic mistakes that people make found in studies of human decision-making?

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 aboveE) None of the above
F) A) and B)

Question 12

Economists use basic psychological insights in the field of study called

Accepted Answer

A)  psychological economics.
B)  transitional economics.
C)  behavioral economics.
D)  social economics.E) B) and D)
F) A) and D)

Question 13

A worker knows more than his employer about how much effort he puts into his job.This is an example of

Accepted Answer

A)  a hidden action.
B)  a hidden characteristic.
C)  adverse selection.
D)  the Condorcet Paradox.E) B) and D)
F) B) and C) A

Question 14

The median voter's preferred outcome is the same as the

Accepted Answer

A)  average preferred outcome.
B)  outcome preferred by the greatest number of voters.
C)  outcome produced by majority rule.
D)  outcome preferred by Arrow's "perfect" voter.E) All of the above
F) A) and B)

Question 15

On car insurance policies,State Ranch Insurance Company offers drivers an option: Policy 1 features a deductible of $1,000,and it requires a driver to pay an annual premium of $500.Policy 2 features a deductible of $500,and it requires a driver to pay an annual premium of $750.

Accepted Answer

A)  In offering these two policies, State Ranch is engaging in illegal price discrimination.
B)  In offering these two policies, State Ranch is screening drivers.
C)  Policy 1 is more of a burden for safe drivers than it is for risky drivers.
D)  In offering these two policies, State Ranch is signaling their quality to drivers.E) A) and C)
F) B) and C)

Question 16

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) All of the above
F) B) and D)

Question 17

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 B)

Question 18

Table 22-5
 
-Refer to Table 22-5.The table shows the preferences of four types of voters over four possible outcomes: W,X,Y,and Z.In addition,the table shows the percentage of voters of each type.Based on this information,which voter is the median voter?

Accepted Answer

A)  Type 1
B)  Type 2
C)  Type 3
D)  There is no median voter in this example.E) A) and D)
F) All of the above

Question 19

In view of the possible need for government action in markets where asymmetric information is a problem,which of the following is a valid concern?

Accepted Answer

A)  The government almost always has more information than the private parties.
B)  Private markets have no means of dealing with information asymmetries on their own.
C)  The government is itself an imperfect institution.
D)  Legally, the government can rarely intervene in markets.E) B) and C)
F) A) and D)

Question 20

Which of the following is an example of signaling?

Accepted Answer

A)  Graduates of highly-respected universities highlight that fact on their resumes.
B)  Magazine advertisements include the phrase "as seen on TV."
C)  Advertisements for universities include the phrase "fully accredited."
D)  All of the above are correct.E) B) and C)
F) C) and D) D

Exam 22: Frontiers of Microeconomics

Condorcet explained his paradox in a 1951 book called Social Choice and Individual Values.

Correct Answer
verified

When Republicans and Democrats offer similar platforms in an election campaign,a likely explanation is the

Correct Answer
verified

One of the things that employers can do to lessen the moral hazard problem involving their employees is to pay them in advance for their work.

Correct Answer
verified

Assume there are two major political parties: the Conservatives and the Liberals.What does the median voter theorem imply about the nature of the platforms (that is,policy stances)of the Conservatives and Liberals?

Correct Answer
verified
The median voter theorem implies that po...
View Answer

When asymmetric information affects a relationship between two parties,it is always the case that

Correct Answer
verified
B

Correct Answer
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Correct Answer
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Explain what is meant by "asymmetric information." Identify and explain the two basic types of problems that arise when there is asymmetric information.

Correct Answer
verified
Asymmetric information is present when t...
View Answer

Evidence from experiments in which real people play the ultimatum game supports the idea that people care about fairness as well as about maximization of their personal wealth.

Correct Answer
verified

Scenario 22-2 Five voters must choose from among four options: W, X, Y, or Z. Each voter's preferences are summarized in the table below. Options higher in the table are more preferred by the voter. -Refer to Scenario 22-2.Which pairwise voting scheme would result in outcome Z?

Correct Answer
verified

People interpret evidence to confirm beliefs they already hold.This statement is an example of which of the following systematic mistakes that people make found in studies of human decision-making?

Correct Answer
verified

Economists use basic psychological insights in the field of study called

Correct Answer
verified

A worker knows more than his employer about how much effort he puts into his job.This is an example of

Correct Answer
verified
A

The median voter's preferred outcome is the same as the

Correct Answer
verified

On car insurance policies,State Ranch Insurance Company offers drivers an option: Policy 1 features a deductible of $1,000,and it requires a driver to pay an annual premium of $500.Policy 2 features a deductible of $500,and it requires a driver to pay an annual premium of $750.

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

The results of the ultimatum game illustrate the fact that

Correct Answer
verified

Table 22-5 -Refer to Table 22-5.The table shows the preferences of four types of voters over four possible outcomes: W,X,Y,and Z.In addition,the table shows the percentage of voters of each type.Based on this information,which voter is the median voter?

Correct Answer
verified

In view of the possible need for government action in markets where asymmetric information is a problem,which of the following is a valid concern?

Correct Answer
verified

Which of the following is an example of signaling?

Correct Answer
verified
D

Exam 22: Frontiers of Microeconomics

Condorcet explained his paradox in a 1951 book called Social Choice and Individual Values.

Correct AnswerverifiedShow Answer

When Republicans and Democrats offer similar platforms in an election campaign,a likely explanation is the

Correct AnswerverifiedShow Answer

One of the things that employers can do to lessen the moral hazard problem involving their employees is to pay them in advance for their work.

Correct AnswerverifiedShow Answer

Assume there are two major political parties: the Conservatives and the Liberals.What does the median voter theorem imply about the nature of the platforms (that is,policy stances)of the Conservatives and Liberals?

Correct AnswerverifiedThe median voter theorem implies that po...View AnswerShow Answer

When asymmetric information affects a relationship between two parties,it is always the case that

Correct AnswerverifiedB

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Explain what is meant by "asymmetric information." Identify and explain the two basic types of problems that arise when there is asymmetric information.

Correct AnswerverifiedAsymmetric information is present when t...View AnswerShow Answer

Evidence from experiments in which real people play the ultimatum game supports the idea that people care about fairness as well as about maximization of their personal wealth.

Correct AnswerverifiedShow Answer

Scenario 22-2 Five voters must choose from among four options: W, X, Y, or Z. Each voter's preferences are summarized in the table below. Options higher in the table are more preferred by the voter. -Refer to Scenario 22-2.Which pairwise voting scheme would result in outcome Z?

Correct AnswerverifiedShow Answer

People interpret evidence to confirm beliefs they already hold.This statement is an example of which of the following systematic mistakes that people make found in studies of human decision-making?

Correct AnswerverifiedShow Answer

Economists use basic psychological insights in the field of study called

Correct AnswerverifiedShow Answer

A worker knows more than his employer about how much effort he puts into his job.This is an example of

Correct AnswerverifiedA

The median voter's preferred outcome is the same as the

Correct AnswerverifiedShow Answer

On car insurance policies,State Ranch Insurance Company offers drivers an option: Policy 1 features a deductible of $1,000,and it requires a driver to pay an annual premium of $500.Policy 2 features a deductible of $500,and it requires a driver to pay an annual premium of $750.

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

The results of the ultimatum game illustrate the fact that

Correct AnswerverifiedShow Answer

Table 22-5 -Refer to Table 22-5.The table shows the preferences of four types of voters over four possible outcomes: W,X,Y,and Z.In addition,the table shows the percentage of voters of each type.Based on this information,which voter is the median voter?

Correct AnswerverifiedShow Answer

In view of the possible need for government action in markets where asymmetric information is a problem,which of the following is a valid concern?

Correct AnswerverifiedShow Answer

Which of the following is an example of signaling?

Correct AnswerverifiedD

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The median voter theorem implies that po...
View Answer

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B

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Asymmetric information is present when t...
View Answer

Correct Answer
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Correct Answer
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A

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D