Question 1

Eli and Peyton are playing the ultimatum game,starting with $100.The coin flip results in Eli being the one to propose a division of the $100.If Eli acts as economic theory assumes,he should propose that

Accepted Answer

A)   he gets $30 and Peyton gets $70.
B)   he gets $50 and Peyton gets $50.
C)   he gets $60 and Peyton gets $40.
D)   he gets $99 and Peyton gets $1.E) A) and B)
F) A) and C)

Question 2

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

Question 3

Which of the following is not an example of a principal trying to solve the moral-hazard problem?

Accepted Answer

A)   the principal conducts an extensive interview of the agent
B)   the principal installs hidden cameras to monitor the agent's behavior
C)   the principal pays the agent efficiency wages
D)   the principal pays the agent a year-end bonusE) All of the above
F) A) and D)

Question 4

A community has five voters who are interested in only one issue: the government's spending on local parks.If Anthony would like the government to spend $12,000 on parks,Bob prefers $7,000,Carey prefers $4,000,Diane prefers $2,000,and Elaine prefers $0,how much spending would a politician seeking to win the election select when running against one opponent?

Accepted Answer

A)   $2,000
B)   $4,000
C)   $7,000
D)   $12,000E) All of the above
F) C) and D)

Question 5

Table 22-3
The citizens of Paradoxopolis will decide whether to build a new school,build a new park,or build a new road.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.If the citizens of Paradoxopolis use a Borda count,rather than pairwise majority voting,to decide what to build,then they will build a new

Accepted Answer

A)   school.
B)   park.
C)   road.
D)   None of the above is correct;a Borda count fails to produce a winner in this instance.E) All of the above
F) None of the above

Question 6

Carlos,who knows nothing about construction,paid Joe to remodel a room in his house.Two years later,one wall in the remodeled room crumbled because Joe used poor-quality materials.This illustrates which economic problem?

Accepted Answer

A)   Adverse selection
B)   Screening
C)   Moral hazard
D)   SignalingE) C) and D)
F) B) and D)

Question 7

Arrow's impossibility theorem demonstrates the impossibility of the median voter theorem.

Accepted Answer

A) True 
 B)False

Question 8

Table 22-3
The citizens of Paradoxopolis will decide whether to build a new school,build a new park,or build a new road.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,"school" beats "road."
B)   In a pairwise election,"road" beats "park."
C)   In a pairwise election,"school" beats "park."
D)   All of the above are correct.E) None of the above
F) A) and C)

Question 9

When homeowners sell a house,part of the paperwork they complete is a statement of disclosure on which the homeowners are supposed to reveal everything that they know is wrong with the house.The purpose of the statement of disclosure is to try to solve the

Accepted Answer

A)   principal-agent problem.
B)   moral-hazard problem.
C)   adverse-selection problem.
D)   signaling problem.E) B) and D)
F) C) and D)

Question 10

Explain the Condorcet paradox.To which type of voting system does it apply?

Accepted Answer

The Condorcet paradox applies directly t...

Question 11

Which of the following statements is not correct?

Accepted Answer

A)   Based on studies of human decision making,most people value fairness.
B)   Based on studies of human decision making,some people's preference are inconsistent over time.
C)   Government intervention is the best remedy for the problems caused by asymmetric information.
D)   Advertising can be an example of a company signaling the quality of its products.E) None of the above
F) B) and D)

Question 12

In economics,a difference in access to relevant knowledge is called a(n)

Accepted Answer

A)   relevancy frontier.
B)   knowledge gap.
C)   information asymmetry.
D)   information equilibrium.E) B) and C)
F) A) and D)

Question 13

Which of the following offers an explanation as to why the principal-agent problem exists for a firm?

Accepted Answer

A)   The firm cares less about profit and more about cost when there are many competitors in the market.
B)   The firm offers an employee-incentive program in which employees share in the firm's profits.
C)   The firm operates in a market with many competitors forcing the firm to pay its employees more to keep them from switching to another firm.
D)   The firm operates to maximize profit while the employees attempt to work as little as possible to earn their paychecks.E) None of the above
F) All of the above

Question 14

When new professors are hired,their job performance is monitored closely.If they meet their institution's standards,they will eventually receive tenure.After receiving tenure,professors' job performance is less closely monitored,and they become difficult to fire.Tenure thus creates

Accepted Answer

A)   adverse selection.
B)   a Condorcet paradox.
C)   a screening problem.
D)   moral hazard.E) B) and C)
F) A) and C)

Question 15

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

Question 16

The science of economics is a finished jewel,perfect and unchanging.

Accepted Answer

A) True 
 B)False

Question 17

Valerie prefers A to B and she prefers B to C.If Valerie's preferences are transitive,then she prefers A to C.

Accepted Answer

A) True 
 B)False

Question 18

What is the name of the mathematical result showing that no voting system can simultaneously satisfy the properties of unanimity,transitivity,independence of irrelevant alternatives,and no dictators?

Accepted Answer

A)   The fundamental theorem of behavioral economics
B)   Arrow's impossibility theorem
C)   The fundamental theorem of voting
D)   The median voter theoremE) A) and C)
F) C) and D)

Question 19

Borda count is a voting method often used in polls that rank sports teams.

Accepted Answer

A) True 
 B)False

Question 20

Economic policy that appears to be ideal in an economics textbook may not be the final policy that is approved by elected politicians because

Accepted Answer

A)   sometimes a politician's self interest may conflict with the national interest.
B)   economics professors have a notoriously low voting rate.
C)   only policies advocated by the President's Council of Economic Advisors receive enough national attention to interest politicians.
D)   Economists cannot explain why politicians do not implement the ideas from their textbooks.E) B) and C)
F) None of the above

Exam 22: Frontiers of Microeconomics

Which of the following offers an explanation as to why the principal-agent problem exists for a firm?

Correct Answer
verified

Borda count is a voting method often used in polls that rank sports teams.

Correct Answer
verified

Which of the following is not an example of a principal trying to solve the moral-hazard problem?

Correct Answer
verified

Carlos,who knows nothing about construction,paid Joe to remodel a room in his house.Two years later,one wall in the remodeled room crumbled because Joe used poor-quality materials.This illustrates which economic problem?

Correct Answer
verified

Valerie prefers A to B and she prefers B to C.If Valerie's preferences are transitive,then she prefers A to C.

Correct Answer
verified

Economic policy that appears to be ideal in an economics textbook may not be the final policy that is approved by elected politicians because

Correct Answer
verified

Correct Answer
verified

In economics,a difference in access to relevant knowledge is called a(n)

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified

Eli and Peyton are playing the ultimatum game,starting with $100.The coin flip results in Eli being the one to propose a division of the $100.If Eli acts as economic theory assumes,he should propose that

Correct Answer
verified

What is the name of the mathematical result showing that no voting system can simultaneously satisfy the properties of unanimity,transitivity,independence of irrelevant alternatives,and no dictators?

Correct Answer
verified

When new professors are hired,their job performance is monitored closely.If they meet their institution's standards,they will eventually receive tenure.After receiving tenure,professors' job performance is less closely monitored,and they become difficult to fire.Tenure thus creates

Correct Answer
verified

Correct Answer
verified

Arrow's impossibility theorem demonstrates the impossibility of the median voter theorem.

Correct Answer
verified

Which of the following is not correct?

Correct Answer
verified

Which of the following statements is not correct?

Correct Answer
verified

When homeowners sell a house,part of the paperwork they complete is a statement of disclosure on which the homeowners are supposed to reveal everything that they know is wrong with the house.The purpose of the statement of disclosure is to try to solve the

Correct Answer
verified

The science of economics is a finished jewel,perfect and unchanging.

Correct Answer
verified

Explain the Condorcet paradox.To which type of voting system does it apply?

Correct Answer
verified
The Condorcet paradox applies directly t...
View Answer

Exam 22: Frontiers of Microeconomics

Which of the following offers an explanation as to why the principal-agent problem exists for a firm?

Correct AnswerverifiedShow Answer

Borda count is a voting method often used in polls that rank sports teams.

Correct AnswerverifiedShow Answer

Which of the following is not an example of a principal trying to solve the moral-hazard problem?

Correct AnswerverifiedShow Answer

Carlos,who knows nothing about construction,paid Joe to remodel a room in his house.Two years later,one wall in the remodeled room crumbled because Joe used poor-quality materials.This illustrates which economic problem?

Correct AnswerverifiedShow Answer

Valerie prefers A to B and she prefers B to C.If Valerie's preferences are transitive,then she prefers A to C.

Correct AnswerverifiedShow Answer

Economic policy that appears to be ideal in an economics textbook may not be the final policy that is approved by elected politicians because

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

In economics,a difference in access to relevant knowledge is called a(n)

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Eli and Peyton are playing the ultimatum game,starting with $100.The coin flip results in Eli being the one to propose a division of the $100.If Eli acts as economic theory assumes,he should propose that

Correct AnswerverifiedShow Answer

What is the name of the mathematical result showing that no voting system can simultaneously satisfy the properties of unanimity,transitivity,independence of irrelevant alternatives,and no dictators?

Correct AnswerverifiedShow Answer

When new professors are hired,their job performance is monitored closely.If they meet their institution's standards,they will eventually receive tenure.After receiving tenure,professors' job performance is less closely monitored,and they become difficult to fire.Tenure thus creates

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Arrow's impossibility theorem demonstrates the impossibility of the median voter theorem.

Correct AnswerverifiedShow Answer

Which of the following is not correct?

Correct AnswerverifiedShow Answer

Which of the following statements is not correct?

Correct AnswerverifiedShow Answer

When homeowners sell a house,part of the paperwork they complete is a statement of disclosure on which the homeowners are supposed to reveal everything that they know is wrong with the house.The purpose of the statement of disclosure is to try to solve the

Correct AnswerverifiedShow Answer

The science of economics is a finished jewel,perfect and unchanging.

Correct AnswerverifiedShow Answer

Explain the Condorcet paradox.To which type of voting system does it apply?

Correct AnswerverifiedThe Condorcet paradox applies directly t...View AnswerShow 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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Correct Answer
verified
The Condorcet paradox applies directly t...
View Answer