Question 1

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) B) and D)

Question 2

Which of the following is not correct?

Accepted Answer

A)   Pairwise voting never produces transitive preferences.
B)   The order of pairwise voting can affect the result.
C)   Majority voting by itself does not tell us what outcome a society really wants.
D)   No voting system can satisfy all of the following properties: unanimity, transitivity, independence of irrelevant alternatives, and no dictators.E) A) and D)
F) A) and C)

Question 3

The 2001 Nobel prize in economics was awarded to George Akerlof,Michael Spence,and Joseph Stiglitz for their work on

Accepted Answer

A)   asymmetric information.
B)   political economy.
C)   behavioral economics.
D)   growth theory.E) None of the above
F) A) and B)

Question 4

Advocates of a tax on soda and other sugary drinks argue that such a tax

Accepted Answer

A)   may encourage better nutrition.
B)   will protect our future selves from the long run negative effects of consuming these drinks.
C)   is needed because people tend to behave inconsistently over time.
D)   All of the above are correct.E) None of the above
F) C) and D)

Question 5

Peter was recently hired as a salesman for a national consulting firm.His job involves spending a significant portion of his time out of the office visiting prospects and attending conferences.Which of the following is a strategy the consulting firm may employ to discourage Peter from shirking his responsibilities?

Accepted Answer

A)   Tell Peter that the shareholders want to earn a large profit this year.
B)   Pay Peter commissions on what he sells after the work has been completed.
C)   Allow Peter to set his own schedule and work from home frequently.
D)   Pay Peter a lower wage than he would earn in a similar job at another firm.E) A) and B)
F) C) and D)

Question 6

Table 22-8
 
-Refer to Table 22-8.The table shows the preferences of four types of voters over four possible outcomes: A,B,C,and D.In addition,the table shows the percentage of voters of each type.Suppose a Borda count election is held in which each voter ranks the four outcomes,giving 1 point to last place,2 points to second to last,3 points to the second best,and 4 points to the best.In this case,which outcome would win?

Accepted Answer

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

Question 7

The tendency of many people to procrastinate supports the view that people are consistent over time.

Accepted Answer

A) True 
 B)False

Question 8

In a dictator game,player A must divide $100 between player A and player B.In this game,player B does not have the opportunity to reject an offer - he or she goes home with whatever player A offers.Experiments have observed that when player A splits the $100,he or she consistently offers over $10 to player B.Which of the following comments fits best.

Accepted Answer

A)   Although player A is acting as economic theory usually assumes, he or she makes such offers because they seem more fair.
B)   Although player A is acting as economic theory usually assumes, he or she makes such offers although they are not fair.
C)   Although player A is not acting as economic theory usually assumes, he or she makes such offers because they seem more fair.
D)   Although player A is not acting as economic theory usually assumes, he or she makes such offers because they are not fair.E) A) and D)
F) A) and C)

Question 9

Table 22-3
The citizens of Anytown will decide whether to build a new library, a new community center, or a new ice rink. 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 22-3.Which of the following statements is correct?

Accepted Answer

A)   In a pairwise election, "library" beats "ice rink."
B)   In a pairwise election, "ice rink" beats "community center."
C)   In a pairwise election, "library" beats "community center."
D)   All of the above are correct.E) A) and B)
F) B) and D)

Question 10

A home has been on the market for an extended amount of time without much interest from buyers.The sellers decide to purchase and include a home warranty insuring against major defects with the home.The warranty is an example of a(n)

Accepted Answer

A)   signal.
B)   screen.
C)   moral hazard.
D)   adverse selection.E) All of the above
F) C) and D)

Question 11

Which of the following is a plausible explanation for a firm paying above-equilibrium wages to its workers?

Accepted Answer

A)   It increases the probability that a worker who shirks will be caught.
B)   It discourages workers from shirking out of fear of losing their high-paying job.
C)   The Condorcet Paradox suggests that paying high wages will result in greater effort by employees.
D)   By paying a high wage, employers solve this adverse selection problem and motivate the employees to work harder.E) B) and C)
F) C) and D)

Question 12

Table 22-2
Three longtime friends-Jack, Ryan, and Colin-are deciding how they will spend their Sunday afternoon. They all agree that they should do one of three things: go to a movie, go to the zoo, or go to a museum. 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 22-2.If (1) the first vote pits "baseball game" against "movie," and (2) the second vote pits "zoo" against the winner of the first vote,then the outcome is as follows:

Accepted Answer

A)   "Baseball game" wins the first vote and "baseball game" wins the second vote, so they go to a baseball game.
B)   "Baseball game" wins the first vote and "zoo" wins the second vote, so they go to the zoo.
C)   "Movie" wins the first vote and "movie" wins the second vote, so they go to a movie.
D)   "Movie" wins the first vote and "zoo" wins the second vote, so they go to the zoo.E) None of the above
F) B) and D)

Question 13

The field of behavioral economics applies the methods of economics to study how government works.

Accepted Answer

A) True 
 B)False

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

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

Accepted Answer

A) True 
 B)False

Question 16

An efficiency wage

Accepted Answer

A)   gives an employee an incentive to shirk his duties.
B)   is lower than the equilibrium wage for that position and region.
C)   is higher than the equilibrium wage for that position and region.
D)   both a and b are correct.E) B) and C)
F) A) and D)

Question 17

Table 22-14
The Johnson family is planning a vacation and, though Mr. and Mrs. Johnson will be paying for the trip, they have decided to use a democratic voting process to choose their destination. The family members' preferences are reflected in the table below.
 
-Refer to Table 22-14.Suppose that before the family can arrive at their decision,Opryland announced that it will be closed for the season due to flooding.Mr.Johnson recommends using a vote by majority rule and proposes first choosing between the Grand Canyon and Sea World,and then choosing between the winner of the first vote and Disneyland.If everyone votes according to their preferences,

Accepted Answer

A)   the winner of the first vote will be Sea World, the winner of the second vote will be Disneyland.
B)   the winner of the first vote will be Sea World, the winner of the second vote will be Grand Canyon.
C)   the winner of the first vote will be Grand Canyon, the winner of the second vote will be Disneyland.
D)   the winner of the first vote will be Grand Canyon, the winner of the second vote will be Grand Canyon.E) B) and C)
F) A) and D)

Question 18

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) C) and D)

Question 19

Table 22-2
Three longtime friends-Jack, Ryan, and Colin-are deciding how they will spend their Sunday afternoon. They all agree that they should do one of three things: go to a movie, go to the zoo, or go to a museum. 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 22-2.Which of the following statements is correct regarding the Condorcet paradox and the results of pairwise voting by Jack,Ryan,and Colin?

Accepted Answer

A)   The paradox implies that pairwise voting never produces transitive preferences, and so the voting by Jack, Ryan, and Colin fails to produce transitive preferences.
B)   The paradox implies that pairwise voting sometimes (but not always)  produces transitive preferences, and the voting by Jack, Ryan, and Colin does produce transitive preferences.
C)   The paradox implies that pairwise voting sometimes (but not always)  fails to produce transitive preferences, and the voting by Jack, Ryan, and Colin fails to produce transitive preferences.
D)   The paradox does not apply to the case at hand, because Ryan's preferences are not individually transitive.E) A) and D)
F) C) and D)

Question 20

Table 22-15
The town of Portsmouth is considering a renovation to the high school. The voters in Portsmouth have different preferences on the budget for the renovation as displayed below.
 
-Refer to Table 22-15.The median voter is one who prefers to spend

Accepted Answer

A)   $4 million.
B)   $8 million
C)   $12 million.
D)   $16 million.E) B) and C)
F) All of the above

Exam 22: Frontiers in Microeconomics.

Correct Answer
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Which of the following is not correct?

Correct Answer
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Advocates of a tax on soda and other sugary drinks argue that such a tax

Correct Answer
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A home has been on the market for an extended amount of time without much interest from buyers.The sellers decide to purchase and include a home warranty insuring against major defects with the home.The warranty is an example of a(n)

Correct Answer
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The tendency of many people to procrastinate supports the view that people are consistent over time.

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

Correct Answer
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Correct Answer
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Correct Answer
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An efficiency wage

Correct Answer
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Table 22-15 The town of Portsmouth is considering a renovation to the high school. The voters in Portsmouth have different preferences on the budget for the renovation as displayed below. -Refer to Table 22-15.The median voter is one who prefers to spend

Correct Answer
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Correct Answer
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Studies of human decision-making show that

Correct Answer
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Which of the following is a plausible explanation for a firm paying above-equilibrium wages to its workers?

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

Correct Answer
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The field of behavioral economics applies the methods of economics to study how government works.

Correct Answer
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The 2001 Nobel prize in economics was awarded to George Akerlof,Michael Spence,and Joseph Stiglitz for their work on

Correct Answer
verified

Exam 22: Frontiers in Microeconomics.

Correct AnswerverifiedShow Answer

Which of the following is not correct?

Correct AnswerverifiedShow Answer

Advocates of a tax on soda and other sugary drinks argue that such a tax

Correct AnswerverifiedShow Answer

A home has been on the market for an extended amount of time without much interest from buyers.The sellers decide to purchase and include a home warranty insuring against major defects with the home.The warranty is an example of a(n)

Correct AnswerverifiedShow Answer

The tendency of many people to procrastinate supports the view that people are consistent over time.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

An efficiency wage

Correct AnswerverifiedShow Answer

Table 22-15 The town of Portsmouth is considering a renovation to the high school. The voters in Portsmouth have different preferences on the budget for the renovation as displayed below. -Refer to Table 22-15.The median voter is one who prefers to spend

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Studies of human decision-making show that

Correct AnswerverifiedShow Answer

Which of the following is a plausible explanation for a firm paying above-equilibrium wages to its workers?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The field of behavioral economics applies the methods of economics to study how government works.

Correct AnswerverifiedShow Answer

The 2001 Nobel prize in economics was awarded to George Akerlof,Michael Spence,and Joseph Stiglitz for their work on

Correct AnswerverifiedShow Answer

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