Exam 22: Frontiers in Microeconomics

Economists have found that asymmetric information is not very prevalent.

Studies of human decision making have found that people are reluctant to change their minds.

​Economists have found that some risky behaviors increase and preventative medicine use decreases when individuals in the U.S. turn 65 and qualify for Medicare (public health insurance). This phenomenon is most consistent with which of the following concepts?

The problem that arises when one person performs a task on behalf of another person is called the lemons problem.

Which of the following students exhibits satisficing behavior?

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. Which of the following statements is correct regarding the Condorcet paradox and the results of pairwise voting on how to improve the safety of the intersection?

Don is convinced that it would be best if the U.S. was on a gold standard. He enthusiastically reads any editorials or articles that confirm his view. He frequently dismisses editorials and articles that argue against the gold standard because he presumes they are flawed or written by "crackpots." Don's behavior most clearly illustrates which of the following systematic mistakes that people make?

Table 22-21 The following table shows the number of voters preferring various amounts of spending to develop a river to make it more attractive for canoeing and kayaking. -Refer to Table 22-21. What is the preferred spending amount of the median voter?

Which of the following is not correct?

Which of the following is a characteristic of a corporation but not of a small family-owned business?

Majority rule will produce the outcome most preferred by the median voter, as demonstrated by the

A radio story reported a study on the makes and models of cars that were observed going through intersections in the Washington, D.C. area without stopping at the stop signs. According to the story, Volvos were heavily overrepresented; the fraction of cars running stop signs that were Volvos was much greater than the fraction of Volvos in the total population of cars in the D.C. area. This is initially surprising because Volvo has built a reputation as an especially safe car that appeals to sensible, safety-conscious drivers. How is this observation best explained?

Table 22-12 The following table shows the preferences for the five voters in a city regarding how to deal with the city's diseased trees. A = do nothing B = follow the expert's advice to remove every tree C = remove every 4th tree now and perhaps more later D = use an untested spraying alternative -Refer to Table 22-12. Consider the public policy for dealing with the diseased trees. Using pairwise majority voting with A versus B, then the winner of that vote versus C, then the winner of that vote versus D, which policy wins?

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

​Suppose there are 3 possible outcomes to a vote: A, B, and C. If voters prefer A to B, C to B, and A to C, which of the following concepts are violated?

Which of the following is not correct?

Frequently it is the case that: (1) A worker knows more than his employer about how much effort he puts into his job, and (2) the seller of a used car knows more than the buyer about the car's condition.

Studies of human decision-making have detected systematic mistakes that people make. Which of the following have been detected?

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

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. If the first vote pits a 2-way stop against a stoplight and the second vote pits a 4-way stop against the winner of the first vote, then the outcome is as follows: