Question 1

Exhibit 14-3   In Exhibit 14-3, if Jira gathers an amount of information equal to 40 minutes,

Accepted Answer

A) she has made the optimal search 
B) she has avoided the cost of acquiring information 
C) she has searched too much 
D) further information will be costless to her 
E) she should increase her search 
A) she has made the optimal search 
B) she has avoided the cost of acquiring information 
C) she has searched too much 
D) further information will be costless to her 
E) she should increase her search

Question 2

Savers have less incentive to care what their bank is doing with their money because their deposits are federally insured.This is a problem of

Accepted Answer

A) nominal interest 
B) adverse selection 
C) moral hazard 
D) the winner's curse 
E) a positive externality 
A) nominal interest 
B) adverse selection 
C) moral hazard 
D) the winner's curse 
E) a positive externality

Question 3

By requiring that policyholders pay a deductible on a claim, insurers guard against

Accepted Answer

A) symmetrical information 
B) adverse selection 
C) natural selection 
D) moral hazard 
E) the winner's curse 
A) symmetrical information 
B) adverse selection 
C) natural selection 
D) moral hazard 
E) the winner's curse

Question 4

If the production of a sofa requires the purchase of 3 types of inputs and the production of a harp requires the purchase of 30 types of inputs,

Accepted Answer

A) the harp-producing firm will buy the sofa-producing firm 
B) the sofa-producing firm will buy the harp-producing firm 
C) harp production is more likely to be done by firms than sofa production is 
D) sofa production is more likely to be done by firms than harp production is 
E) both harp and sofa production will always be done by firms because there is more than one input involved in each 
A) the harp-producing firm will buy the sofa-producing firm 
B) the sofa-producing firm will buy the harp-producing firm 
C) harp production is more likely to be done by firms than sofa production is 
D) sofa production is more likely to be done by firms than harp production is 
E) both harp and sofa production will always be done by firms because there is more than one input involved in each

Question 5

The timeshare condominium in Florida you bought last year turned out to involve many extra costs and restrictions that were not apparent when you bought it.This is an example of

Accepted Answer

A) natural selection 
B) moral hazard 
C) hidden actions 
D) open-access resources 
E) hidden characteristics 
A) natural selection 
B) moral hazard 
C) hidden actions 
D) open-access resources 
E) hidden characteristics

Question 6

At Tony's Car Wash, a team of four workers washes and rinses each car by hand, and one worker dries the car by hand.Which of the following is true?

Accepted Answer

A) Tony will have no principal-agent problems. 
B) Tony will have more principal-agent problems in washing and rinsing than in drying the cars. 
C) Tony will have more principal-agent problems in drying than in washing and rinsing the cars. 
D) Tony will be awash in severe principal-agent problems. 
E) Tony will have no incentive to monitor the car wash. 
A) Tony will have no principal-agent problems. 
B) Tony will have more principal-agent problems in washing and rinsing than in drying the cars. 
C) Tony will have more principal-agent problems in drying than in washing and rinsing the cars. 
D) Tony will be awash in severe principal-agent problems. 
E) Tony will have no incentive to monitor the car wash.

Question 7

Principal-agent problems are less likely to arise

Accepted Answer

A) if it is easy for principals to know agents' actions and if there is less conflict between their goals 
B) if it is difficult for principals to know agents' actions and if there is less conflict between their goals 
C) if it is easy for principals to know agents' actions and if there is some difference in their goals 
D) if it is difficult for principals to know agents' actions and if there is some difference in their goals 
E) if agents have higher incomes 
A) if it is easy for principals to know agents' actions and if there is less conflict between their goals 
B) if it is difficult for principals to know agents' actions and if there is less conflict between their goals 
C) if it is easy for principals to know agents' actions and if there is some difference in their goals 
D) if it is difficult for principals to know agents' actions and if there is some difference in their goals 
E) if agents have higher incomes

Exhibit 14-3 In Exhibit 14-3, if Jira gathers an amount of information equal to 40 minutes,

Savers have less incentive to care what their bank is doing with their money because their deposits are federally insured.This is a problem of

By requiring that policyholders pay a deductible on a claim, insurers guard against

If the production of a sofa requires the purchase of 3 types of inputs and the production of a harp requires the purchase of 30 types of inputs,

The timeshare condominium in Florida you bought last year turned out to involve many extra costs and restrictions that were not apparent when you bought it.This is an example of

At Tony's Car Wash, a team of four workers washes and rinses each car by hand, and one worker dries the car by hand.Which of the following is true?

Principal-agent problems are less likely to arise

The Art and Science of Economic Analysis

Appendix--Understanding Graphs

Economic Tools and Economics Systems

Economic Decision Makers

Demand, Supply, and Markets

Elasticity of Demand and Supply

Appendix--Price Elasticity and Tax Incidence

Consumer Choice and Demand

Appendix--Indifference Curves and Utility Maximization

Production and Cost in the Firm

A--Perfect Competition

B--Perfect Competition

A--Monopoly

B--Monopoly

Monopolistic Competition and Oligopoly

Resource Markets

Labor Markets and Labor Unions

Capital, Interest, and Corporate Finance

Economic Regulation and Antitrust Policy

Public Goods and Public Choice

Externalities and the Environment

Income Distribution and Poverty

International Trade

International Finance

Economic Development

Filters

Exam 14: Transaction Costs, Imperfect Information, and Behavioral Economics

Exhibit 14-3 In Exhibit 14-3, if Jira gathers an amount of information equal to 40 minutes,

Savers have less incentive to care what their bank is doing with their money because their deposits are federally insured.This is a problem of

By requiring that policyholders pay a deductible on a claim, insurers guard against

If the production of a sofa requires the purchase of 3 types of inputs and the production of a harp requires the purchase of 30 types of inputs,

The timeshare condominium in Florida you bought last year turned out to involve many extra costs and restrictions that were not apparent when you bought it.This is an example of

At Tony's Car Wash, a team of four workers washes and rinses each car by hand, and one worker dries the car by hand.Which of the following is true?

Principal-agent problems are less likely to arise

The Art and Science of Economic Analysis

Appendix--Understanding Graphs

Economic Tools and Economics Systems

Economic Decision Makers

Demand, Supply, and Markets

Elasticity of Demand and Supply

Appendix--Price Elasticity and Tax Incidence

Consumer Choice and Demand

Appendix--Indifference Curves and Utility Maximization

Production and Cost in the Firm

A--Perfect Competition

B--Perfect Competition

A--Monopoly

B--Monopoly

Monopolistic Competition and Oligopoly

Resource Markets

Labor Markets and Labor Unions

Capital, Interest, and Corporate Finance

Economic Regulation and Antitrust Policy

Public Goods and Public Choice

Externalities and the Environment

Income Distribution and Poverty

International Trade

International Finance

Economic Development

Filters