Question 1

Table 22-21
The following table shows the number of voters preferring various amounts of spending to develop a river to make it more attractive for canoeing and kayaking. 
-Refer to Table 22-21. Suppose the voters are asked to choose between $1 million and $2.5 million. If all voters cast a vote for the spending amount closest to their own preference, how many votes will the $1 million spending amount receive?

Accepted Answer

A)  25
B)  47
C)  72
D)  102E) None of the above
F) B) and D)

Question 2

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

Question 3

Conventional economic theory suggests that in the ultimatum game, the player proposing a split of $50 will propose that she get $49 and that the other player get $1. By the same reasoning, if the amount to be split is $1000, the player proposing the split will propose that she gets

Accepted Answer

A)  $500 and that the other player gets $500.
B)  $998 and that the other player gets $2.
C)  $999 and that the other player gets $1.
D)  $1000 and that the other player gets nothing.E) A) and B)
F) A) and C)

Question 4

People tend to wait until deadlines get close to work on projects in part because they believe that they can complete the projects in less time than it will actually take. Which findings from behavioral economics is this observation consistent with?

Accepted Answer

A)  People tend to be time inconsistent and people tend to be overconfident.
B)  People tend to be time inconsistent but not that people tend to be overconfident.
C)  People tend to be overconfident, but not that people tend to be time inconsistent.
D)  Neither that people tend to be overconfident nor that people tend to be time inconsistent.E) A) and B)
F) All of the above

Question 5

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

Question 6

Which of the following relationships involves asymmetric information?

Accepted Answer

A)  An employee is unsure what she will spend her annual performance bonus on.
B)  A loan applicant knows more about the likelihood her business will be successful than the loan officer.
C)  Someone considering buying running shoes looks at a number of online reviews by buyers.
D)  All of the above are correct.E) A) and B)
F) A) and C)

Question 7

According to one survey 76 percent of Americans said they were not saving enough for retirement. This example of inconsistency over time

Accepted Answer

A)  is rational behavior.
B)  likely occurs because saving requires a sacrifice in the present for a reward in the distant future.
C)  likely occurs because Americans don't care about retirement.
D)  definitely would not happen if Americans earned a greater return on their investments.E) A) and B)
F) B) and D)

Question 8

The criminal actions of the top managers of corporations such as Enron, Tyco, WorldCom, and Adelphia are an example of moral hazard.

Accepted Answer

A) True 
 B)False

Question 9

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) C) and D)
F) B) and C)

Question 10

Table 22-17 
-Refer to Table 22-17. The table shows the preferences for three types of voters over three possible outcomes: A, B, and C. 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 B and C, C loses since only the Type 1 voters prefer C to B.
B)  In a vote between A and B, B wins getting 85% of the total vote.
C)  In a vote between A and C, C loses getting only 45% of the total vote.
D)  Both a and b.E) C) and D)
F) B) and D)

Question 11

Which of the following statements captures the meaning of transitivity of preferences?

Accepted Answer

A)  If A is preferred to B, then B is less preferred than A.
B)  If A is preferred to B, and B is preferred to C, then A is preferred to C.
C)  If A is preferred to B and B is preferred to C, then the preference for A over B is stronger than the preference for B over C.
D)  If A is preferred to C, then there exists B such that A is preferred to B and C is preferred to A.E) A) and C)
F) None of the above

Question 12

The problem that arises in markets in which the seller knows more about the characteristics of the good being sold than the buyer knows is

Accepted Answer

The answer of The problem that arises in markets in...

Question 13

Which of the following is an example of an adverse selection problem?

Accepted Answer

A)  A customer purchases four apples, two of which are bruised.
B)  A card shop puts its Halloween merchandise on sale on November 1st.
C)  A young job applicant fails to reveal that she was fired from her last job because she was incompetent.
D)  A man rents a car and then drives it less carefully and fills it with cheaper gas than he would if he owned it.E) A) and B)
F) A) and C)

Question 14

State one reason why government intervention may not be a good solution to an asymmetric information problem.

Accepted Answer

Possible answers:
1. The private market ...

Question 15

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) A) and B)
F) C) and D)

Question 16

A brand of wine is priced at only $5 per bottle, far below the market price of most high quality wines. Before any reputation exists for the wine, consumers buy very little of this inexpensive wine because they interpret the low price to mean that the wine is of poor quality. The company decides to change the label on the wine to show that it has won awards for quality. This label change is an example of

Accepted Answer

A)  signaling.
B)  screening.
C)  selecting.
D)  All of the above are correct.E) A) and B)
F) A) and C)

Question 17

The Condorcet paradox shows that

Accepted Answer

A)  allocations of resources based on majority rule are always inefficient.
B)  problems in counting votes can negate legitimate democratic outcomes.
C)  the order on which things are voted can affect the result.
D)  transitive preferences are inconsistent with rationality.E) None of the above
F) All of the above

Question 18

An airline knows that business travelers have more inelastic demand for travel than vacationers. That is, business travelers are often willing to pay more for airline tickets than vacationers. The airline also knows that business travelers do not like to travel over weekends. When customers request airline tickets that do not involve travel over a weekend, the airline determines that a traveler is likely a business traveler and charges a higher price. This is an example of

Accepted Answer

A)  moral hazard.
B)  signaling.
C)  screening.
D)  adverse selection.E) A) and D)
F) B) and C)

Question 19

The ultimatum game reveals that

Accepted Answer

A)  it does not make sense to try to maximize profits.
B)  people may have an innate sense of fairness that economic theory does not capture.
C)  offering someone a wildly unfair outcome is usually ok since people tend to make decisions using a "something is better than nothing" philosophy.
D)  Both a and b.E) A) and B)
F) None of the above

Question 20

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...

Exam 22: Frontiers in Microeconomics

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

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 shows that

Correct Answer
verified

The criminal actions of the top managers of corporations such as Enron, Tyco, WorldCom, and Adelphia are an example of moral hazard.

Correct Answer
verified

Conventional economic theory suggests that in the ultimatum game, the player proposing a split of $50 will propose that she get $49 and that the other player get $1. By the same reasoning, if the amount to be split is $1000, the player proposing the split will propose that she gets

Correct Answer
verified

Which of the following relationships involves asymmetric information?

Correct Answer
verified

The ultimatum game reveals that

Correct Answer
verified

People tend to wait until deadlines get close to work on projects in part because they believe that they can complete the projects in less time than it will actually take. Which findings from behavioral economics is this observation consistent with?

Correct Answer
verified

The problem that arises in markets in which the seller knows more about the characteristics of the good being sold than the buyer knows is

Correct Answer
verified

Correct Answer
verified

Which of the following statements is not correct?

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Which of the following is an example of an adverse selection problem?

Correct Answer
verified

Which of the following statements captures the meaning of transitivity of preferences?

Correct Answer
verified

State one reason why government intervention may not be a good solution to an asymmetric information problem.

Correct Answer
verified
Possible answers:
1. The private market ...
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

Table 22-17 -Refer to Table 22-17. The table shows the preferences for three types of voters over three possible outcomes: A, B, and C. The table also shows the percentage of voters of each type. Based on this information, which of the following statements is true?

Correct Answer
verified

According to one survey 76 percent of Americans said they were not saving enough for retirement. This example of inconsistency over time

Correct Answer
verified

Exam 22: Frontiers in Microeconomics

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

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 shows that

Correct AnswerverifiedShow Answer

The criminal actions of the top managers of corporations such as Enron, Tyco, WorldCom, and Adelphia are an example of moral hazard.

Correct AnswerverifiedShow Answer

Conventional economic theory suggests that in the ultimatum game, the player proposing a split of $50 will propose that she get $49 and that the other player get $1. By the same reasoning, if the amount to be split is $1000, the player proposing the split will propose that she gets

Correct AnswerverifiedShow Answer

Which of the following relationships involves asymmetric information?

Correct AnswerverifiedShow Answer

The ultimatum game reveals that

Correct AnswerverifiedShow Answer

People tend to wait until deadlines get close to work on projects in part because they believe that they can complete the projects in less time than it will actually take. Which findings from behavioral economics is this observation consistent with?

Correct AnswerverifiedShow Answer

The problem that arises in markets in which the seller knows more about the characteristics of the good being sold than the buyer knows is

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following statements is not correct?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following is an example of an adverse selection problem?

Correct AnswerverifiedShow Answer

Which of the following statements captures the meaning of transitivity of preferences?

Correct AnswerverifiedShow Answer

State one reason why government intervention may not be a good solution to an asymmetric information problem.

Correct AnswerverifiedPossible answers:1. The private market ...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

Table 22-17 -Refer to Table 22-17. The table shows the preferences for three types of voters over three possible outcomes: A, B, and C. 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

According to one survey 76 percent of Americans said they were not saving enough for retirement. This example of inconsistency over time

Correct AnswerverifiedShow Answer

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

Correct Answer
verified

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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Possible answers:
1. The private market ...
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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