Question 1

Which of the following is a characteristic of a corporation but not of a small family-owned business?

Accepted Answer

A)   The corporation buys inputs in markets for the factors of production.
B)   The corporation sells output in markets for goods and services.
C)   The corporation is guided in its decisions by the objective of profit maximization.
D)   The corporation faces a principal-agent problem created by the separation of ownership and control.E) A) and D)
F) None of the above

Question 2

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

Question 3

The adverse selection problem is a likely explanation for the fact that

Accepted Answer

A)   some parents use video cameras to monitor the nannies caring for their children.
B)   some corporate managers were recently sent to prison for enriching themselves at the expense of shareholders.
C)   people in average health may be discouraged from buying health insurance by the high price.
D)   gifts can be interpreted as signals.E) B) and C)
F) All of the above

Question 4

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. If an election were held between spending $2 million and $3 million, the median voter would vote for

Accepted Answer

A)   $3 million and $3 million would win.
B)   $3 million and $2 million would win.
C)   $2 million and $3 million would win.
D)   $2 million and $2 million would win.E) None of the above
F) All of the above

Question 5

Table 22-14
Amy, Beth, and Connie are on a hiring committee. They have interviewed 3 candidates identified by their last names and are going to vote on which one is hired.
 
-Refer to Table 22-14. What would the results of a Borda Count vote be?

Accepted Answer

A)   Adams and Brown tie.
B)   Adams wins.
C)   Brown wins.
D)   Campbell wins.E) B) and C)
F) A) and B)

Question 6

Table 22-25
Sophie, Huan, and Santiago are lost with no map or GPS available. They come to an intersection at which they can turn left, turn right, or continue going straight. Their preferences are summarized in the table.
 
-Refer to Table 22-25. The travelers decide to conduct pairwise voting with the majority determining the outcome of each vote to decide their next move. Sophie is very confident that the travelers need to go left but she is having a difficult time convincing her friends. If she wants to ensure that the result of the voting is "left," how should she organize the voting?

Accepted Answer

first vote: right vs...

Question 7

Table 22-8
The citizens of Mayville are having a severe budget shortage and are faced with eliminating athletics from the town high school. The town administrator has determined that the town can afford to maintain one sport. 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 22-8. If the town administrator first asks the citizens to vote for hockey or basketball and then asks them to choose between the winner of the first vote and football, what will be the outcome?

Accepted Answer

A)   Hockey will win the first vote and hockey will win the second vote.
B)   Hockey will win the first vote and football will win the second vote.
C)   Basketball will win the first vote and basketball will win the second vote.
D)   Basketball will win the first vote and football will win the second vote.E) B) and D)
F) B) and C)

Question 8

Which of the following statements is not correct?

Accepted Answer

A)   Based on studies of human decision making, most people value fairness.
B)   Based on studies of human decision making, some people's preference are inconsistent over time.
C)   Government intervention is the best remedy for the problems caused by asymmetric information.
D)   Advertising can be an example of a company signaling the quality of its products.E) A) and C)
F) A) and B)

Question 9

Majority rule will produce the outcome most preferred by the median voter, as demonstrated by the

Accepted Answer

A)   Arrow impossibility theorem.
B)   Condorcet paradox.
C)   pairwise voting proposition.
D)   median voter theorem.E) None of the above
F) A) and D)

Question 10

Which of the following students exhibits satisficing behavior?

Accepted Answer

A)   Mick studies his economics notes every night so that he can be sure to earn a perfect score on his exam.
B)   Bill studies his economics notes for a few hours the night before the test because he will be satisfied with a C on his exam.
C)   Marguerite studies extensively as she will only be satisfied with a very high score.
D)   None of these students exhibits satisficing behavior.E) All of the above
F) A) and B)

Question 11

Which of the following is not an example of asymmetric information?

Accepted Answer

A)   When someone is applying for a job, the employer checks references to determine the previous work habits of the applicant.
B)   When an employee purchases group life insurance without taking a physical exam, she knows more about her health than does the insurance company.
C)   When someone is considering buying a used car from a dealership, the dealer knows more about the true condition of the car than does the potential buyer.
D)   All of the above are examples of asymmetric information.E) All of the above
F) A) and B)

Question 12

In economics, a difference in access to relevant knowledge is called a(n)

Accepted Answer

A)   relevancy frontier.
B)   knowledge gap.
C)   information asymmetry.
D)   information equilibrium.E) None of the above
F) A) and B)

Question 13

Employers may choose to pay their workers a wage that exceeds the equilibrium wage according to

Accepted Answer

A)   efficiency-wage theories.
B)   equilibrium wage theories.
C)   screening theories.
D)   signaling theories.E) A) and B)
F) None of the above

Question 14

The Condorcet paradox

Accepted Answer

A)   demonstrates that the order in which one votes on options may influence the outcome.
B)   demonstrates that majority voting by itself may not reveal the outcome that society wants.
C)   disproves Arrow's impossibility theorem.
D)   Both a and b are correct.E) A) and C)
F) C) and D)

Question 15

Studies of human decision-making show that

Accepted Answer

A)   firms are less likely to maximize profits than consumers are to maximize utility.
B)   firms are more likely to maximize profits than consumers are to maximize utility.
C)   people are irrational more often than they are rational.
D)   people are reluctant to change their minds.E) A) and B)
F) A) and C)

Question 16

Which of the following is an example of moral hazard?

Accepted Answer

A)   a driver is arrested for drunk driving
B)   a pet-sitter being paid to walk a dog for one hour per day only walks the dog for 20 minutes per day
C)   a thief steals a car
D)   All of the above are examples of moral hazard.E) A) and B)
F) A) and C)

Question 17

Moral hazard and adverse selection are similar asymmetric information problems but moral hazard involves hidden actions while adverse selection involves hidden characteristics.

Accepted Answer

A) True 
 B)False

Question 18

Pete owns a small store. He has noticed that when he is not at the store monitoring his employees, his revenue goes down. What are two changes Pete could make to wages he pays his employees to correct this problem?

Accepted Answer

delay payment/tie pa...

Question 19

The problem that arises when one person performs a task on behalf of another person is called

Accepted Answer

A)   the hidden characteristics problem.
B)   the lemons problem.
C)   moral hazard.
D)   adverse selection.E) B) and C)
F) A) and C)

Question 20

Which of the following is not an example of signaling?

Accepted Answer

A)   screening
B)   advertising
C)   getting an education
D)   gift givingE) B) and C)
F) A) and B)

Exam 22: Frontiers of Microeconomics

Which of the following is not an example of signaling?

Correct Answer
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The problem that arises when one person performs a task on behalf of another person is called

Correct Answer
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Which of the following students exhibits satisficing behavior?

Correct Answer
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Table 22-14 Amy, Beth, and Connie are on a hiring committee. They have interviewed 3 candidates identified by their last names and are going to vote on which one is hired. -Refer to Table 22-14. What would the results of a Borda Count vote be?

Correct Answer
verified

Pete owns a small store. He has noticed that when he is not at the store monitoring his employees, his revenue goes down. What are two changes Pete could make to wages he pays his employees to correct this problem?

Correct Answer
verified
delay payment/tie pa...
View Answer

The Condorcet paradox

Correct Answer
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Moral hazard and adverse selection are similar asymmetric information problems but moral hazard involves hidden actions while adverse selection involves hidden characteristics.

Correct Answer
verified

Which of the following is an example of moral hazard?

Correct Answer
verified

The adverse selection problem is a likely explanation for the fact that

Correct Answer
verified

Studies of human decision-making show that

Correct Answer
verified

Correct Answer
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first vote: right vs...
View Answer

Which of the following statements is not correct?

Correct Answer
verified

Employers may choose to pay their workers a wage that exceeds the equilibrium wage according to

Correct Answer
verified

In economics, a difference in access to relevant knowledge is called a(n)

Correct Answer
verified

Which of the following is a characteristic of a corporation but not of a small family-owned business?

Correct Answer
verified

Majority rule will produce the outcome most preferred by the median voter, as demonstrated by the

Correct Answer
verified

Correct Answer
verified

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. If an election were held between spending $2 million and $3 million, the median voter would vote for

Correct Answer
verified

Which of the following is not an example of asymmetric information?

Correct Answer
verified

Exam 22: Frontiers of Microeconomics

Which of the following is not an example of signaling?

Correct AnswerverifiedShow Answer

The problem that arises when one person performs a task on behalf of another person is called

Correct AnswerverifiedShow Answer

Which of the following students exhibits satisficing behavior?

Correct AnswerverifiedShow Answer

Table 22-14 Amy, Beth, and Connie are on a hiring committee. They have interviewed 3 candidates identified by their last names and are going to vote on which one is hired. -Refer to Table 22-14. What would the results of a Borda Count vote be?

Correct AnswerverifiedShow Answer

Pete owns a small store. He has noticed that when he is not at the store monitoring his employees, his revenue goes down. What are two changes Pete could make to wages he pays his employees to correct this problem?

Correct Answerverifieddelay payment/tie pa...View AnswerShow Answer

The Condorcet paradox

Correct AnswerverifiedShow Answer

Moral hazard and adverse selection are similar asymmetric information problems but moral hazard involves hidden actions while adverse selection involves hidden characteristics.

Correct AnswerverifiedShow Answer

Which of the following is an example of moral hazard?

Correct AnswerverifiedShow Answer

The adverse selection problem is a likely explanation for the fact that

Correct AnswerverifiedShow Answer

Studies of human decision-making show that

Correct AnswerverifiedShow Answer

Correct Answerverifiedfirst vote: right vs...View AnswerShow Answer

Which of the following statements is not correct?

Correct AnswerverifiedShow Answer

Employers may choose to pay their workers a wage that exceeds the equilibrium wage according to

Correct AnswerverifiedShow Answer

In economics, a difference in access to relevant knowledge is called a(n)

Correct AnswerverifiedShow Answer

Which of the following is a characteristic of a corporation but not of a small family-owned business?

Correct AnswerverifiedShow Answer

Majority rule will produce the outcome most preferred by the median voter, as demonstrated by the

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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. If an election were held between spending $2 million and $3 million, the median voter would vote for

Correct AnswerverifiedShow Answer

Which of the following is not an example of asymmetric information?

Correct AnswerverifiedShow Answer

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Correct Answer
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delay payment/tie pa...
View Answer

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Correct Answer
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Correct Answer
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Correct Answer
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first vote: right vs...
View 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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Correct Answer
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Correct Answer
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Correct Answer
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