Question 1

A life insurance company requires new applicants to have a medical exam prior to writing the insurance policy. This requirement is an example of

Accepted Answer

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

Question 2

Table 22-25
Sophie, Huan, and Santiago are lost with no map or GPS available. They come to an intersection at which they can turn left, turn right, or continue going straight. Their preferences are summarized in the table. 
-Refer to Table 22-25. If the travelers decide to use a Borda count, what is the result?

Accepted Answer

The answer of Table 22-25
Sophie, Huan, and Santiago are lost...

Question 3

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 C)
F) B) and C)

Question 4

​Arrow's impossibility theorem proves that

Accepted Answer

A)  ​no voting system can satisfy several preferable properties at the same time.
B)  ​politicians will never be able to satisfy the median voter.
C)  ​politicians will never be able to act fully in the best interests of the public good.
D)  ​no voting system will ever depend on the median voter.E) A) and B)
F) A) and C)

Question 5

A travel agency offers a money-back guarantee for vacationers taking their first cruise in case they do not enjoy the experience. This guarantee is an example of

Accepted Answer

The answer of A travel agency offers a money-back guarantee...

Question 6

Sam needs to have his car serviced. There is an auto repair shop located nearby that does a lot of business and has an online rating of 4 out of 5 stars. Sam takes his car to be serviced and thinks the service person is grumpy and that his car is still not running as well as it could be. Sam then makes a point of telling his friends not to use the repair shop. Sam's actions illustrate which of the following systematic mistakes that people make when making decisions?

Accepted Answer

A)  People are overconfident.
B)  People give too much weight to a small number of vivid observations.
C)  People are reluctant to change their minds.
D)  All of the above are correct.E) A) and D)
F) All of the above

Question 7

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?

Accepted Answer

A)  ​People are overconfident.
B)  ​People behave in a time inconsistent manner.
C)  ​People give too much weight to a small number of vivid observations.
D)  ​People are reluctant to change their minds.E) A) and D)
F) B) and C)

Question 8

In his 1951 book, Social Choice and Individual Values, Kenneth Arrow defined a "perfect" voting system. That system includes which of the following features?

Accepted Answer

A)  unanimity
B)  transitivity
C)  absence of a dictator
D)  All of the above are correct.E) A) and B)
F) All of the above

Question 9

When each voter has a most-preferred outcome for the expenditure on a particular government program, majority rule will produce the outcome

Accepted Answer

A)  preferred by the mean (average)  voter.
B)  preferred by the median voter.
C)  that causes the political party in power to increase its power.
D)  defined by Arrow's Impossibility Theorem.E) A) and B)
F) B) and D)

Question 10

Explain what is meant by "asymmetric information." Identify and explain the two basic types of problems that arise when there is asymmetric information.

Accepted Answer

Asymmetric information is present when t...

Question 11

Herbert Simon, one of the first social scientists to work at the boundary of economics and psychology, suggested that humans should be viewed not as rational maximers but as

Accepted Answer

The answer of Herbert Simon, one of the first social...

Question 12

Ihaveathousandfriends Social Networking firm had a remarkably profitable year. As a result, its employees expect to receive bonus checks. Which of the following insights into human behavior do the employees exhibit?

Accepted Answer

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

Question 13

The field of behavioral economics builds a more subtle and complex model of economic behavior using insights from

Accepted Answer

A)  physics.
B)  biology.
C)  psychology.
D)  anthropology.E) B) and C)
F) C) and D)

Question 14

Asymmetric information, political economy, and behavioral economics

Accepted Answer

A)  are topics at the frontier of microeconomics.
B)  are topics that economists no longer research.
C)  are attempts by economists to expand their understanding of human behavior and society.
D)  both a and c are correct.E) All of the above
F) None of the above

Question 15

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

Question 16

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?

Accepted Answer

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

Question 17

One of the things that employers can do to lessen the moral hazard problem involving their employees is to pay them in advance for their work.

Accepted Answer

A) True 
 B)False

Question 18

Moral hazard occurs when

Accepted Answer

A)  an employer closely monitors an employee.
B)  two people consider a trade with each other and one person has relevant information about some aspect of the product's quality that the other person lacks.
C)  an employee lacks an incentive to promote the best interests of the employer, and the employer cannot observe the actions of the employee.
D)  an employee closely monitors the actions of her employer.E) C) and D)
F) B) and D)

Question 19

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 an agent?

Accepted Answer

A)  Shana
B)  Katie
C)  Belinda
D)  MagdaE) A) and B)
F) A) and C)

Question 20

Table 22-20
The table below shows the preferred city budget (in millions)  for
in the city of Springfield. 
-Refer to Table 22-20. In an election, each voter will select the budget closest to his or her most preferred budget. In which of the following cases does a budget of $32 win?

Accepted Answer

A)  $32 versus $10, and $32 versus $40
B)  $32 versus $10, but not $32 versus $40
C)  $32 versus $40, but not $32 versus $10
D)  Neither $32 versus $10 nor $32 versus $40E) A) and D)
F) A) and C)

Exam 22: Frontiers in Microeconomics

Correct Answer
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Herbert Simon, one of the first social scientists to work at the boundary of economics and psychology, suggested that humans should be viewed not as rational maximers but as

Correct Answer
verified

A life insurance company requires new applicants to have a medical exam prior to writing the insurance policy. This requirement is an example of

Correct Answer
verified

Arrow's impossibility theorem proves that

Correct Answer
verified

One of the things that employers can do to lessen the moral hazard problem involving their employees is to pay them in advance for their work.

Correct Answer
verified

Correct Answer
verified

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?

Correct Answer
verified

Correct Answer
verified

A travel agency offers a money-back guarantee for vacationers taking their first cruise in case they do not enjoy the experience. This guarantee is an example of

Correct Answer
verified

In his 1951 book, Social Choice and Individual Values, Kenneth Arrow defined a "perfect" voting system. That system includes which of the following features?

Correct Answer
verified

Moral hazard occurs when

Correct Answer
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Table 22-20 The table below shows the preferred city budget (in millions) for in the city of Springfield. -Refer to Table 22-20. In an election, each voter will select the budget closest to his or her most preferred budget. In which of the following cases does a budget of $32 win?

Correct Answer
verified

Asymmetric information, political economy, and behavioral economics

Correct Answer
verified

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

Correct Answer
verified

Explain what is meant by "asymmetric information." Identify and explain the two basic types of problems that arise when there is asymmetric information.

Correct Answer
verified
Asymmetric information is present when t...
View Answer

Correct Answer
verified

Ihaveathousandfriends Social Networking firm had a remarkably profitable year. As a result, its employees expect to receive bonus checks. Which of the following insights into human behavior do the employees exhibit?

Correct Answer
verified

The field of behavioral economics builds a more subtle and complex model of economic behavior using insights from

Correct Answer
verified

Correct Answer
verified

When each voter has a most-preferred outcome for the expenditure on a particular government program, majority rule will produce the outcome

Correct Answer
verified

Exam 22: Frontiers in Microeconomics

Correct AnswerverifiedShow Answer

Herbert Simon, one of the first social scientists to work at the boundary of economics and psychology, suggested that humans should be viewed not as rational maximers but as

Correct AnswerverifiedShow Answer

A life insurance company requires new applicants to have a medical exam prior to writing the insurance policy. This requirement is an example of

Correct AnswerverifiedShow Answer

​Arrow's impossibility theorem proves that

Correct AnswerverifiedShow Answer

One of the things that employers can do to lessen the moral hazard problem involving their employees is to pay them in advance for their work.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A travel agency offers a money-back guarantee for vacationers taking their first cruise in case they do not enjoy the experience. This guarantee is an example of

Correct AnswerverifiedShow Answer

In his 1951 book, Social Choice and Individual Values, Kenneth Arrow defined a "perfect" voting system. That system includes which of the following features?

Correct AnswerverifiedShow Answer

Moral hazard occurs when

Correct AnswerverifiedShow Answer

Table 22-20 The table below shows the preferred city budget (in millions) for in the city of Springfield. -Refer to Table 22-20. In an election, each voter will select the budget closest to his or her most preferred budget. In which of the following cases does a budget of $32 win?

Correct AnswerverifiedShow Answer

Asymmetric information, political economy, and behavioral economics

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Explain what is meant by "asymmetric information." Identify and explain the two basic types of problems that arise when there is asymmetric information.

Correct AnswerverifiedAsymmetric information is present when t...View AnswerShow Answer

Correct AnswerverifiedShow Answer

Ihaveathousandfriends Social Networking firm had a remarkably profitable year. As a result, its employees expect to receive bonus checks. Which of the following insights into human behavior do the employees exhibit?

Correct AnswerverifiedShow Answer

The field of behavioral economics builds a more subtle and complex model of economic behavior using insights from

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

When each voter has a most-preferred outcome for the expenditure on a particular government program, majority rule will produce the outcome

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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Arrow's impossibility theorem proves that

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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Correct Answer
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Correct Answer
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Correct Answer
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Asymmetric information is present when t...
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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Correct Answer
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