Question 1

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 D)
F) B) and C)

Question 2

Table 22-3
 
-Refer to Table 22-3.The table shows the preferences for three types of voters over three possible outcomes: X,Y,and Z.The table also shows the percentage of voters of each type.Based on this information,which of the following statements is true?

Accepted Answer

A)  In a vote between X and Y, X loses since only the Type 1 voters prefer X to Y.
B)  In a vote between Y and Z, Y wins getting 80% of the total vote.
C)  In a vote between X and Z, X loses getting only 45% of the total vote.
D)  Both a and BE) B) and D)
F) All of the above

Question 3

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) None of the above
F) All of the above

Question 4

The Condorcet voting paradox applies to situations in which voters

Accepted Answer

A)  decide between exactly two possible outcomes.
B)  decide among more than two possible outcomes.
C)  as a group have transitive preferences
D)  choose the inferior candidate even though the majority preferred the better candidate.E) A) and C)
F) B) and C)

Question 5

The moral hazard problem and the desire of firms to lessen that problem serve as a plausible explanation for a firm paying above-equilibrium wages to its workers.

Accepted Answer

A) True 
 B)False

Question 6

Recent research that links psychology and economics is called

Accepted Answer

A)  comparative psychology.
B)  psychological economics.
C)  behavioral economics.
D)  sociology.E) A) and C)
F) None of the above

Question 7

Evidence from studies of workers' choices on whether or not to participate in 401(k) plans suggests that the workers' behavior appears to exhibit

Accepted Answer

A)  indifference.
B)  ignorance.
C)  inertia.
D)  overconfidence.E) A) and C)
F) B) and C)

Question 8

The buyer runs a risk of being sold a good of low quality when there is

Accepted Answer

A)  a principal-agent problem.
B)  a moral-hazard problem.
C)  a problem involving hidden actions.
D)  a problem involving hidden characteristics.E) None of the above
F) B) and D)

Question 9

Scenario 22-1
At issue in a particular city vote is how much to spend, per person, on city parks next year. Among the 10,000 voters, 1,000 prefer to spend $30 per person, but no more; 3,500 prefer to spend $45 per person, but no more; 2,500 prefer to spend $80 per person, but no more; and 3,000 prefer to spend $150 per person, but no more.
-Refer to Scenario 22-1.If there is a vote on whether to spend $80 per person or $110 per person,the median voter will vote to spend

Accepted Answer

A)  $80 per person and the voting outcome will be $80 per person.
B)  $80 per person and the voting outcome will be $110 per person.
C)  $110 per person and the voting outcome will be $80 per person.
D)  $110 per person and the voting outcome will be $110 per person.E) All of the above
F) A) and B)

Question 10

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.Which of the following statements is correct?

Accepted Answer

A)  In a pairwise election, "movie" beats "concert."
B)  In a pairwise election, "concert" beats "dinner."
C)  In a pairwise election, "dinner" beats "movie."
D)  None of the above is correct.E) A) and C)
F) A) and D)

Question 11

Most economic models

Accepted Answer

A)  incorporate the assumption of rational behavior on the part of economic actors.
B)  incorporate the notion that people are usually reluctant to change their minds.
C)  are meant to precisely duplicate reality.
D)  assume that people often make sub-optimal choices.E) C) and D)
F) A) and D)

Question 12

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 Sam,Diane,and Cliff use a Borda count,rather than pairwise majority voting,to decide how to spend their evening,then they will go

Accepted Answer

A)  to a movie.
B)  to a concert.
C)  out to dinner.
D)  None of the above is correct; a Borda count fails to produce a winner in this instance.E) B) and C)
F) C) and D)

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

Question 14

Some of the systematic mistakes that people make include

Accepted Answer

A)  being overconfident.
B)  placing too much weight on events that are more vivid compared to those with greater statistical probability.
C)  being generally unwilling to change their minds.
D)  All of the above are correct.E) A) and B)
F) All of the above

Question 15

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

Accepted Answer

A)  an example of the adverse-selection problem.
B)  an example of the "lemons" problem.
C)  an example of the principal-agent problem.
D)  an example of signaling.E) A) and D)
F) A) and B)

Question 16

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

Question 17

In his 1951 book,Social Choice and Individual Values,Kenneth Arrow defined a "perfect" voting system.That system includes which of the following features?

Accepted Answer

A)  unanimity
B)  transitivity
C)  absence of a dictator
D)  All of the above are correct.E) None of the above
F) C) and D)

Question 18

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

Accepted Answer

A)  transitivity.
B)  transversality.
C)  normality.
D)  universality.E) B) and C)
F) A) and D)

Question 19

ABC Inc.is concerned about the work effort of its employees.To minimize this problem,which of the following would be an effective policy for ABC to implement?

Accepted Answer

A)  Pay the employees a wage in excess of the wage the employees would earn elsewhere.
B)  Secretly install videocameras to monitor employees, and fire employees who shirk their responsibilities.
C)  Eliminate profit-sharing programs since these tend to give employees the incentive to shirk their duties until the year-end bonus is paid.
D)  Both a and b are correct.E) C) and D)
F) B) and C)

Question 20

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)  reaffirm the good qualities of democracy.
D)  point to the fact that government is a less-than-perfect institution.E) All of the above
F) A) and B)

Exam 22: Frontiers of Microeconomics

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

Correct Answer
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Table 22-3 -Refer to Table 22-3.The table shows the preferences for three types of voters over three possible outcomes: X,Y,and Z.The table also shows the percentage of voters of each type.Based on this information,which of the following statements is true?

Correct Answer
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Some of the systematic mistakes that people make include

Correct Answer
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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

Recent developments in political economy

Correct Answer
verified

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

In his 1951 book,Social Choice and Individual Values,Kenneth Arrow defined a "perfect" voting system.That system includes which of the following features?

Correct Answer
verified

Evidence from studies of workers' choices on whether or not to participate in 401(k) plans suggests that the workers' behavior appears to exhibit

Correct Answer
verified

ABC Inc.is concerned about the work effort of its employees.To minimize this problem,which of the following would be an effective policy for ABC to implement?

Correct Answer
verified

Correct Answer
verified

The buyer runs a risk of being sold a good of low quality when there is

Correct Answer
verified

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

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

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

Correct Answer
verified

Recent research that links psychology and economics is called

Correct Answer
verified

The moral hazard problem and the desire of firms to lessen that problem serve as a plausible explanation for a firm paying above-equilibrium wages to its workers.

Correct Answer
verified

The Condorcet voting paradox applies to situations in which voters

Correct Answer
verified

Most economic models

Correct Answer
verified

Exam 22: Frontiers of Microeconomics

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Table 22-3 -Refer to Table 22-3.The table shows the preferences for three types of voters over three possible outcomes: X,Y,and Z.The table also shows the percentage of voters of each type.Based on this information,which of the following statements is true?

Correct AnswerverifiedShow Answer

Some of the systematic mistakes that people make include

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

Recent developments in political economy

Correct AnswerverifiedShow Answer

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

In his 1951 book,Social Choice and Individual Values,Kenneth Arrow defined a "perfect" voting system.That system includes which of the following features?

Correct AnswerverifiedShow Answer

Evidence from studies of workers' choices on whether or not to participate in 401(k) plans suggests that the workers' behavior appears to exhibit

Correct AnswerverifiedShow Answer

ABC Inc.is concerned about the work effort of its employees.To minimize this problem,which of the following would be an effective policy for ABC to implement?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The buyer runs a risk of being sold a good of low quality when there is

Correct AnswerverifiedShow Answer

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

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

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

Correct AnswerverifiedShow Answer

Recent research that links psychology and economics is called

Correct AnswerverifiedShow Answer

The moral hazard problem and the desire of firms to lessen that problem serve as a plausible explanation for a firm paying above-equilibrium wages to its workers.

Correct AnswerverifiedShow Answer

The Condorcet voting paradox applies to situations in which voters

Correct AnswerverifiedShow Answer

Most economic models

Correct AnswerverifiedShow Answer

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