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Exam 22: Frontiers in Microeconomics

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Question 131

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Table 22-18 The following table shows the preferences of four types of voters over four possible alternatives as well as the percentage of the electorate with the given preferences. -Refer to Table 22-18. Suppose voters first choose in a majority vote between W and X. Second, voters choose in a majority vote between the winner of the first vote and Y. Third, voters choose in a majority vote between the winner of the second vote and Z. Which alternative will win?

A) W
B) X
C) Y
D) Z

E) None of the above
F) B) and C)

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Question 132

Multiple Choice

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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?

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

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

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Question 133

Multiple Choice

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Table 22-7 Suppose that residents of a town are asked to vote on the best way to improve the safety of an intersection. The three choices are: a stoplight, a 4-way stop, and a 2-way stop. The voters are divided into three groups based on their preferences. Voter Type -Refer to Table 22-7. If the vote were conducted according to a Borda count system where each person's first choice receives 3 points, second choice 2 points, and third choice 1 point, the result would be

Rick goes to work 8 hours per day, but while he is at work he spends most of his time visiting internet sites monitoring his fantasy football teams. This is an example of

Juanita is preparing to study for her economics final exam. She tells her friend that she will be happy if she just gets a B, even though she could likely earn an A if she studied harder. Juanita is what Herbert Simon would call a

Narrative 22-1 Katie owns a boutique that sells high-end women's clothing and accessories. Shana works part-time at the boutique and frequently is the only employee in this small store. Katie pays Shana a wage that is higher than the market wage for this type of job. When the store is not full of customers, Shana diligently works on displays and cleans to keep the store looking its best. Magda is a customer in the store who asks Shana's opinion on the quality of some jeans she is considering purchasing. Even though she's had several other customers return them due to flaws, Shana tells Magda the quality is great. Belinda is another customer who is returning a necklace without revealing that she lost a gem from it while wearing it. -Refer to Narrative 22-1. Which of the ladies is causing a moral hazard problem?

The Latin term caveat emptor, meaning "let the buyer beware," brings to mind the problem of

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

The field of economics that combines the study the psychology of human behavior and economic issues is

In Homer's Odyssey, Odysseus instructs his crew members to tie him to the mast of the ship so that he is not later tempted by the Siren's song. Which of the following irrational behaviors was he trying to avoid?

A firm with a very good product

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

Table 22-5 The citizens of Anytown will decide whether to build a new library, a recreation center, or an arena. 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 22-5. Which of the following statements is correct regarding the Condorcet paradox and the results of pairwise voting in Anytown?

Table 22-7 Suppose that residents of a town are asked to vote on the best way to improve the safety of an intersection. The three choices are: a stoplight, a 4-way stop, and a 2-way stop. The voters are divided into three groups based on their preferences. Voter Type -Refer to Table 22-7. If the first vote pits a 2-way stop against a stoplight and the second vote pits a 4-way stop against the winner of the first vote, then the outcome is as follows:

The Condorcet paradox

An unhealthy person would likely choose a medical insurance policy with a

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

Don is convinced that it would be best if the U.S. was on a gold standard. He enthusiastically reads any editorials or articles that confirm his view. He frequently dismisses editorials and articles that argue against the gold standard because he presumes they are flawed or written by "crackpots." Don's behavior most clearly illustrates which of the following systematic mistakes that people make?

If you are assigned the role of Player A in the Ultimatum game and you propose that player B gets $1 and you get $99

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