Question 1

One implication of the Condorcet paradox is

Accepted Answer

A)   that the order in which things are voted on can affect the result.
B)   that the order in which things are voted on is irrelevant.
C)   that you do not want to be in charge of arranging which items are voted upon first.
D)   that when there are only two items being voted on the order matters.E) C) and D)
F) B) and C)

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) None of the above
F) A) and B)

Question 3

Studies of human decision-making have found that people do not give enough weight to a small number of vivid observations.

Accepted Answer

A) True 
 B)False

Question 4

Arrow's impossibility theorem shows that no voting system can satisfy which of the following properties?

Accepted Answer

A)   unanimity and transitivity only
B)   transitivity and independence of irrelevant alternatives only
C)   no dictators and transitivity only
D)   unanimity,transitivity,independence of irrelevant alternatives,and no dictatorsE) A) and B)
F) None of the above

Question 5

When Republicans and Democrats offer similar platforms in an election campaign,a likely explanation is the

Accepted Answer

A)   Arrow impossibility theorem.
B)   Condorcet paradox.
C)   median voter theorem.
D)   fact that politicians are more interested in the national interest than their own self-interest.E) A) and D)
F) A) and C)

Question 6

Economist Kenneth Arrow wrote a famous book in 1951 in which he took up the question,

Accepted Answer

A)   Is there a perfect voting system?
B)   Are preferences transitive?
C)   Is a dictatorship a good form of government?
D)   Should the president of the United States be elected to a single,six-year term?E) B) and D)
F) B) and C)

Question 7

Studies show that during the March Madness college basketball tournament,the productivity of 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 B)
F) A) and C)

Question 8

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

Question 9

The field of political economy

Accepted Answer

A)   casts aside most of the standard methods of economic analysis.
B)   is also referred to as the field of public choice.
C)   is also referred to as the field of macroeconomics.
D)   produces the conclusion that democratic principles rarely lead to desirable economic outcomes.E) B) and D)
F) A) and C)

Question 10

The classic example of adverse selection is the

Accepted Answer

A)   market for used cars.
B)   market for new cars.
C)   relationship between shareholders and managers.
D)   relationship between a coach and an athlete.E) A) and D)
F) None of the above

Question 11

The problem of moral hazard is a problem of hidden action.

Accepted Answer

A) True 
 B)False

Question 12

Chaz and Katie have been dating for several years.Chaz loves Katie very much and wants to marry her.Which of the following is the best way to signal his love to her?

Accepted Answer

A)   Chaz should buy Katie a box of his favorite chocolates.
B)   Chaz should give Katie $15,000 cash to purchase her own engagement ring,since he doesn't know what kind she would like.
C)   Chaz should buy Katie the diamond ring that she has been looking at recently in the jewelry store window.
D)   Chaz should send Katie a text asking for her hand in marriage.E) None of the above
F) C) and D)

Question 13

Which of the following practices would indicate that an employer is trying to overcome a moral-hazard problem with his employees?

Accepted Answer

A)   The employer pays his workers wages that are unusually high for the industry and region.
B)   The employer has voluntarily removed video cameras from the factory floor.
C)   The employer has discontinued the practice of giving his employees' year-end bonuses.
D)   Both A and B are correct.E) A) and D)
F) B) and C)

Question 14

The fact that someone with a high risk of medical problems is likely to buy a large amount of health insurance is an example of

Accepted Answer

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

Question 15

Which of the following is not an example of a moral hazard problem?

Accepted Answer

A)   A manager stays late one evening so that her employee can leave early to attend his child's music recital.
B)   A small child takes an extra cookie from the cookie jar when he thinks his mom isn't watching him closely.
C)   An employee plays solitaire on her computer at 4:30 p.m.on a Friday when her boss has left for the day.
D)   A customer whose new eyeglasses come with a "60-day insurance policy in case of breakage" leaves her glasses out where her new puppy can chew on them.E) C) and D)
F) A) and B)

Question 16

Riley travels a great deal,and over the past several years he has read dozens of reviews of hotel chains,all of which rave about the clean rooms and great service at Comeon Inns.Last month,Riley checked into a room at a Comeon Inn for the first time,only to find the room filthy and the service lousy.He decided the Comeon Inn chain is inferior to other hotel chains.

Accepted Answer

A)   Riley was irrational to have believed the reviews that he had read.
B)   Riley was rational to have changed his mind about Comeon Inns based on his one experience.
C)   Riley is an example of someone who gives too much weight to a small number of vivid observations.
D)   Riley is an example of someone who is reluctant to change his mind.E) A) and D)
F) None of the above

Question 17

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

Question 18

How have insights from the field of psychology influenced the thinking of economists in recent years?

Accepted Answer

Insights from psychology have led some e...

Question 19

Budweiser typically purchases several 30 second advertising spots during the Super Bowl at a very high cost.Miller Brewing Co.typically does not advertise during the Super Bowl.Which of the following is correct?

Accepted Answer

A)   Budweiser chooses to signal during the Super Bowl,while Miller Brewing Co.does not.
B)   Budweiser chooses to screen during the Super Bowl,while Miller Brewing Co.does not.
C)   Miller does not advertise during the Super Bowl because it has a superior product and the audience already knows that.
D)   Budweiser's advertisements during the Super Bowl are entertaining but convey no information about the quality of its products.E) A) and B)
F) All of the above

Question 20

Which of the following is an example of signaling?

Accepted Answer

A)   Graduates of highly-respected universities highlight that fact on their resumes.
B)   Magazine advertisements include the phrase "as seen on TV."
C)   Advertisements for universities include the phrase "fully accredited."
D)   All of the above are correct.E) A) and B)
F) None of the above

Exam 22: Frontiers of Microeconomics

One implication of the Condorcet paradox is

Correct Answer
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Which of the following practices would indicate that an employer is trying to overcome a moral-hazard problem with his employees?

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

Correct Answer
verified

Economist Kenneth Arrow wrote a famous book in 1951 in which he took up the question,

Correct Answer
verified

Arrow's impossibility theorem shows that no voting system can satisfy which of the following properties?

Correct Answer
verified

The classic example of adverse selection is the

Correct Answer
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Which of the following is an example of signaling?

Correct Answer
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Studies of human decision-making have found that people do not give enough weight to a small number of vivid observations.

Correct Answer
verified

Which of the following is not an example of a moral hazard problem?

Correct Answer
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Budweiser typically purchases several 30 second advertising spots during the Super Bowl at a very high cost.Miller Brewing Co.typically does not advertise during the Super Bowl.Which of the following is correct?

Correct Answer
verified

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

Correct Answer
verified

The fact that someone with a high risk of medical problems is likely to buy a large amount of health insurance is an example of

Correct Answer
verified

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

Correct Answer
verified

The problem of moral hazard is a problem of hidden action.

Correct Answer
verified

The field of political economy

Correct Answer
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Correct Answer
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How have insights from the field of psychology influenced the thinking of economists in recent years?

Correct Answer
verified
Insights from psychology have led some e...
View Answer

When Republicans and Democrats offer similar platforms in an election campaign,a likely explanation is the

Correct Answer
verified

Studies show that during the March Madness college basketball tournament,the productivity of average company in the US falls considerably.This is an example of

Correct Answer
verified

Chaz and Katie have been dating for several years.Chaz loves Katie very much and wants to marry her.Which of the following is the best way to signal his love to her?

Correct Answer
verified

Exam 22: Frontiers of Microeconomics

One implication of the Condorcet paradox is

Correct AnswerverifiedShow Answer

Which of the following practices would indicate that an employer is trying to overcome a moral-hazard problem with his employees?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Economist Kenneth Arrow wrote a famous book in 1951 in which he took up the question,

Correct AnswerverifiedShow Answer

Arrow's impossibility theorem shows that no voting system can satisfy which of the following properties?

Correct AnswerverifiedShow Answer

The classic example of adverse selection is the

Correct AnswerverifiedShow Answer

Which of the following is an example of signaling?

Correct AnswerverifiedShow Answer

Studies of human decision-making have found that people do not give enough weight to a small number of vivid observations.

Correct AnswerverifiedShow Answer

Which of the following is not an example of a moral hazard problem?

Correct AnswerverifiedShow Answer

Budweiser typically purchases several 30 second advertising spots during the Super Bowl at a very high cost.Miller Brewing Co.typically does not advertise during the Super Bowl.Which of the following is correct?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The fact that someone with a high risk of medical problems is likely to buy a large amount of health insurance is an example of

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The problem of moral hazard is a problem of hidden action.

Correct AnswerverifiedShow Answer

The field of political economy

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

How have insights from the field of psychology influenced the thinking of economists in recent years?

Correct AnswerverifiedInsights from psychology have led some e...View AnswerShow Answer

When Republicans and Democrats offer similar platforms in an election campaign,a likely explanation is the

Correct AnswerverifiedShow Answer

Studies show that during the March Madness college basketball tournament,the productivity of average company in the US falls considerably.This is an example of

Correct AnswerverifiedShow Answer

Chaz and Katie have been dating for several years.Chaz loves Katie very much and wants to marry her.Which of the following is the best way to signal his love to her?

Correct AnswerverifiedShow Answer

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Insights from psychology have led some e...
View Answer

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