Question 1

Table 22-15
Diane, Henry, and Linda are voting for who to promote. They can only promote one candidate. Their preferences are given in the table below. 
-Refer to Table 22-15. Which of the following statements is correct regarding the Condorcet paradox and the results of pairwise voting by Henry, Diane, and Linda?

Accepted Answer

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

Question 2

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

Question 3

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 B)
F) All of the above

Question 4

Table 22-9
Voter Type 
-Refer to Table 22-9. The table shows the preferences of four types of voters over four possible outcomes: A, B, C, D. In addition, the table shows the percentage of voters of each type. Based on this information, which of the following statements is false?

Accepted Answer

A)   Outcome D is preferred to outcome C overall.
B)   Outcome C is preferred to outcome B overall.
C)   Outcome B is preferred to outcome D overall.
D)   Outcome D is preferred to outcome A overall.E) A) and B)
F) All of the above

Question 5

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 6

Majority rule will produce the outcome most preferred by the median voter.

Accepted Answer

A) True 
 B)False

Question 7

Adverse selection

Accepted Answer

A)   occurs when the overall quality of choices facing a consumer is very low.
B)   is a greater problem for employees than employers.
C)   occurs more frequently in the market for new cars than used cars.
D)   is not easily remedied by free markets.E) A) and D)
F) A) and B)

Question 8

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.
Voter Type 
-Refer to Table 22-5. If (1)  the first vote pits "library" against "arena," and (2)  the second vote pits "recreation center" against the winner of the first vote, then the outcome is as follows:

Accepted Answer

A)   "Library" wins the first vote and "library" wins the second vote, so they build a library.
B)   "Library" wins the first vote and "recreation center" wins the second vote, so they build a recreation center.
C)   "arena" wins the first vote and "arena" wins the second vote, so they build an arena.
D)   "arena" wins the first vote and "recreation center" wins the second vote, so they build a recreation center.E) C) and D)
F) A) and B)

Question 9

Information asymmetry refers to

Accepted Answer

A)   the tendency of a person who is imperfectly monitored to engage in dishonest or otherwise undesirable behavior.
B)   the tendency for the mix of unobserved attributes to become undesirable from the standpoint of an uninformed party.
C)   an action taken by an informed party to reveal private information to an uninformed party.
D)   a difference in access to relevant knowledge.E) C) and D)
F) B) and D)

Question 10

The field of political economy applies the methods of

Accepted Answer

A)   psychology to study how the economy works.
B)   political science to study how the economy works
C)   economics to study how government works.
D)   psychology to study how government works.E) A) and B)
F) None of the above

Question 11

Table 22-24
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 22-24. If the town decides to use a Borda count, which sport will win?

Accepted Answer

The answer of Table 22-24
The citizens of Mayville are having...

Question 12

Suppose that in a Borda count election, outcome X is preferred to outcome Y, and outcome Y is preferred to outcome Z, when outcomes X, Y, and Z are all available options. When Y is removed as an option, however, outcome Z is preferred to outcome X. This would violate Arrow's assumption that voting systems should satisfy

Accepted Answer

A)   unanimity.
B)   transitivity.
C)   the independence of irrelevant alternatives.
D)   no dictators.E) A) and B)
F) None of the above

Question 13

Some of the systematic mistakes that people make include

Accepted Answer

A)   being overconfident.
B)   placing too much weight on events that are more vivid compared to those with greater statistical probability.
C)   being generally unwilling to change their minds.
D)   All of the above are correct.E) B) and D)
F) B) and C)

Question 14

Table 22-2
Three longtime friends-Allen, Brian, and Cody-are deciding how they will spend their Sunday afternoon. They all agree that they should do one of three things: go to a movie, play golf, or go to a baseball game. They also agree that they will have two pairwise votes to determine how to spend their afternoon, 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?

Accepted Answer

A)   In a pairwise election, "movie" beats "golf."
B)   In a pairwise election, "golf" beats "baseball game."
C)   In a pairwise election, "baseball game" beats "movie."
D)   None of the above is correct.E) B) and D)
F) A) and B)

Question 15

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. Based on the information in the table, which of the following statements is true?

Accepted Answer

A)   In a vote between a 2-way stop and a stoplight, stoplight wins because 40% of voters have stoplight as their 1st choice.
B)   In a vote between a 2-way stop and a 4-way stop, the 4-way stop wins getting 80% of the total vote.
C)   In a vote between a 4-way stop and a stoplight, there is a tie because each gets 40% of the vote.
D)   None of the above are true.E) A) and C)
F) None of the above

Question 16

A "satisficer" is a person whose decision making is the same as that predicted by mainstream economic models.

Accepted Answer

A) True 
 B)False

Question 17

Table 22-16
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 22-16. Mr. Johnson recommends using a vote by majority rule and proposes first choosing between Opryland and the Grand Canyon, then choosing between the winner of the first vote and Sea World, and finally choosing between the winner of the second vote and Disneyland. If everyone votes according to their preferences,

Accepted Answer

A)   the winner of the first vote will be Opryland, the winner of the second vote will be Sea World, and the winner of the final vote will be Disneyland.
B)   the winner of the first vote will be Grand Canyon, the winner of the second vote will be Grand Canyon, and the winner of the final vote will be Disneyland.
C)   the winner of the first vote will be Grand Canyon, the winner of the second vote will be Sea World, and the winner of the final 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, and the winner of the final vote will be Grand Canyon.E) A) and B)
F) None of the above

Question 18

The two major problems caused by asymmetric information are the moral-hazard problem and the principal-agent problem.

Accepted Answer

A) True 
 B)False

Question 19

Employers can try to overcome the moral-hazard problem involving their employees by

Accepted Answer

A)   paying their employees more often.
B)   paying their employees below-equilibrium wages since the employees will likely shirk some of their responsibilities.
C)   better monitoring their employees' work efforts.
D)   requiring their employees to take a pre-employment work effort test.E) A) and B)
F) None of the above

Question 20

Table 22-4
The fortunate residents of Anytown have a budget surplus. The mayor decided that it is only fair to have the residents vote on what to do with the surplus. The mayor has narrowed the options down to three possible projects: a playground, a library, or a swimming pool. The voters fall into three categories and have preferences as illustrated in the table. 
-Refer to Table 22-4. If the mayor asks the residents to choose between the library and the swimming pool using pairwise voting,

Accepted Answer

A)   the library wins by 30%.
B)   the library wins by 65%.
C)   the swimming pool wins by 10%.
D)   the swimming pool wins by 35%.E) A) and B)
F) None of the above

Exam 22: Frontiers of Microeconomics

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

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

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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Employers can try to overcome the moral-hazard problem involving their employees by

Correct Answer
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Correct Answer
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Correct Answer
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Table 22-9 Voter Type -Refer to Table 22-9. The table shows the preferences of four types of voters over four possible outcomes: A, B, C, D. In addition, the table shows the percentage of voters of each type. Based on this information, which of the following statements is false?

Correct Answer
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A "satisficer" is a person whose decision making is the same as that predicted by mainstream economic models.

Correct Answer
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Correct Answer
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Correct Answer
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Majority rule will produce the outcome most preferred by the median voter.

Correct Answer
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The field of political economy applies the methods of

Correct Answer
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Correct Answer
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The Condorcet paradox

Correct Answer
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Information asymmetry refers to

Correct Answer
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The two major problems caused by asymmetric information are the moral-hazard problem and the principal-agent problem.

Correct Answer
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Adverse selection

Correct Answer
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Correct Answer
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Some of the systematic mistakes that people make include

Correct Answer
verified

Exam 22: Frontiers of Microeconomics

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Studies of human decision-making show that

Correct AnswerverifiedShow Answer

Employers can try to overcome the moral-hazard problem involving their employees by

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Table 22-9 Voter Type -Refer to Table 22-9. The table shows the preferences of four types of voters over four possible outcomes: A, B, C, D. In addition, the table shows the percentage of voters of each type. Based on this information, which of the following statements is false?

Correct AnswerverifiedShow Answer

A "satisficer" is a person whose decision making is the same as that predicted by mainstream economic models.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Majority rule will produce the outcome most preferred by the median voter.

Correct AnswerverifiedShow Answer

The field of political economy applies the methods of

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The Condorcet paradox

Correct AnswerverifiedShow Answer

Information asymmetry refers to

Correct AnswerverifiedShow Answer

The two major problems caused by asymmetric information are the moral-hazard problem and the principal-agent problem.

Correct AnswerverifiedShow Answer

Adverse selection

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Some of the systematic mistakes that people make include

Correct AnswerverifiedShow Answer

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