Exam 22: Frontiers in Microeconomics

Pete owns a small store. He has noticed that when he is not at the store monitoring his employees, his revenue goes down. What are two changes Pete could make to wages he pays his employees to correct this problem?

When one party is better informed about an economic situation than another party, economists describe the problem as one of

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,

Arrow's impossibility theorem illustrates the difficulties in creating the perfect voting system.

The assertion that the median voter is "king" refers directly to the result established by the

​Which of the following is best explained with behavioral economics rather than traditional economics?

Based on the studies of human decision making, which of the following statements is correct?

Assume there are 4065 voters in a certain small town and let x = the preferred number of dollars charged monthly to support local parks. For Voters 1-1050, x = $10; for voters 1051-2121, x= $20, for voters 2122-3334, x = $30; for voters 3335-3998, x = $40; and for 3999-4065, x = $50. Based on these preferences, which of the dollar amounts will win over any of the others?

The Arrow impossibility theorem shows that

The proposal to place a tax on soda is intended to address what insight about human behavior?

Table 22-18 The following table shows the preferences of four types of voters over four possible alternatives as well as the percentage of the electorate with the given preferences. -Refer to Table 22-18. In a majority vote between alternatives W and X, what percentage of the votes would W receive?

A "satisficer" is a person who

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. 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:

Which voter is the voter whose views on a policy issue are in the middle of the spectrum, with half of the voters on one side of this voter's view and half on the other side.

When an individual purchases health insurance and knows more about her family medical history than the insurance company, this is an example of adverse selection​.​

Which of the following statements is correct?

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

Table 22-9 -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?

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. -Refer to Table 22-24. Suppose the townspeople vote and choose hockey but the town administrator overrules the vote and chooses football because the town's football team has a chance of winning the state championship. Which of the properties of Arrow's impossibility theorem is violated?

In a moral hazard problem, the agent is unable to perfectly monitor the principal's behavior so the principal applies less effort than the agent considers desirable.