Question 1

Evidence from experiments in which real people play the ultimatum game supports the idea that people

Accepted Answer

A) are rational wealth-maximizers. 
B) tend to be driven by fairness, without regard for their own self-interest. 
C) are driven by both fairness and self-interest. 
D) have trouble calculating their own levels of wealth. 
A) are rational wealth-maximizers. 
B) tend to be driven by fairness, without regard for their own self-interest. 
C) are driven by both fairness and self-interest. 
D) have trouble calculating their own levels of wealth.

Question 2

​A car mechanic knowing more about what's wrong with your vehicle than you do is best explained by which of the following concepts:

Accepted Answer

A) ​Asymmetric information 
B) ​Adverse selection 
C) ​Availability bias 
D) ​Bounded rationality 
A) ​Asymmetric information 
B) ​Adverse selection 
C) ​Availability bias 
D) ​Bounded rationality

Question 3

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. 
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.

Question 4

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. If the town administrator asks voters to choose first between hockey and basketball and then between the winner of the first vote and football, which sport will win the final vote?

Accepted Answer

The answer of Table 22-24
The citizens of Mayville are having...

Question 5

Advocates of a tax on soda and other sugary drinks argue that such a tax

Accepted Answer

A) may encourage better nutrition. 
B) will protect our future selves from the long run negative effects of consuming these drinks. 
C) is needed because people tend to behave inconsistently over time. 
D) All of the above are correct. 
A) may encourage better nutrition. 
B) will protect our future selves from the long run negative effects of consuming these drinks. 
C) is needed because people tend to behave inconsistently over time. 
D) All of the above are correct.

Question 6

The suggestion that people are "satisficers" is similar to the view that people

Accepted Answer

A) are wealth-maximizers. 
B) exhibit "bounded rationality." 
C) go to a lot of trouble to weigh costs and benefits before choosing a course of action. 
D) change their minds often. 
A) are wealth-maximizers. 
B) exhibit "bounded rationality." 
C) go to a lot of trouble to weigh costs and benefits before choosing a course of action. 
D) change their minds often.

Question 7

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 $22 win?

Accepted Answer

A) $22 versus $10, and $22 versus $40 
B) $22 versus $10, but not $22 versus $40 
C) $22 versus $40, but not $22 versus $10 
D) Neither $22 versus $10 nor $22 versus $40 
A) $22 versus $10, and $22 versus $40 
B) $22 versus $10, but not $22 versus $40 
C) $22 versus $40, but not $22 versus $10 
D) Neither $22 versus $10 nor $22 versus $40

Question 8

Which of the following practices would indicate that an employer is trying to overcome a moral-hazard problem with his employees?

Accepted Answer

A) The employer pays his workers wages that are unusually high for the industry and region. 
B) The employer pays his employees year-end bonuses depending to how well the business does and his observations of the employees' efforts. 
C) The employer has voluntarily removed video cameras from the factory floor. 
D) Both A and B are correct. 
A) The employer pays his workers wages that are unusually high for the industry and region. 
B) The employer pays his employees year-end bonuses depending to how well the business does and his observations of the employees' efforts. 
C) The employer has voluntarily removed video cameras from the factory floor. 
D) Both A and B are correct.

Question 9

Screening is an action taken by an uninformed party to induce an informed party to reveal information.

Accepted Answer

A) True 
 B)False

Question 10

Table 22-8
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 22-8. If the town administrator first asks the citizens to vote for hockey or basketball and then asks them to choose between the winner of the first vote and football, what will be the outcome?

Accepted Answer

A) Hockey will win the first vote and hockey will win the second vote. 
B) Hockey will win the first vote and football will win the second vote. 
C) Basketball will win the first vote and basketball will win the second vote. 
D) Basketball will win the first vote and football will win the second vote. 
A) Hockey will win the first vote and hockey will win the second vote. 
B) Hockey will win the first vote and football will win the second vote. 
C) Basketball will win the first vote and basketball will win the second vote. 
D) Basketball will win the first vote and football will win the second vote.

Question 11

Which of the following is not correct?

Accepted Answer

A) Economics is a study of the choices that people make and the resulting interactions they have with one another. 
B) In areas it has already studied, economists have found perfect and unchanging answers. 
C) Economists are trying to expand their understanding of human behavior and society. 
D) The economics of asymmetric information, political economy, and behavioral economics are all topics at the frontier of microeconomics. 
A) Economics is a study of the choices that people make and the resulting interactions they have with one another. 
B) In areas it has already studied, economists have found perfect and unchanging answers. 
C) Economists are trying to expand their understanding of human behavior and society. 
D) The economics of asymmetric information, political economy, and behavioral economics are all topics at the frontier of microeconomics.

Question 12

Asymmetric information

Accepted Answer

A) is not an area of current research in economics. 
B) can take the form of a hidden action or a hidden characteristic. 
C) explains Arrow's impossibility theorem. 
D) is uncommon in corporate management. 
A) is not an area of current research in economics. 
B) can take the form of a hidden action or a hidden characteristic. 
C) explains Arrow's impossibility theorem. 
D) is uncommon in corporate management.

Question 13

Table 22-14
Amy, Beth, and Connie are on a hiring committee. They have interviewed 3 candidates identified by their last names and are going to vote on which one is hired.   '
-Refer to Table 22-14. Below are lists of results for two separate elections between two candidates. In which case are both results correct?

Accepted Answer

A) Adams wins over Brown and Brown wins over Campbell 
B) Adams wins over Brown and Campbell wins over Brown 
C) Brown wins over Adams and Brown wins over Campbell 
D) Brown wins over Adams and Campbell wins over Brown 
A) Adams wins over Brown and Brown wins over Campbell 
B) Adams wins over Brown and Campbell wins over Brown 
C) Brown wins over Adams and Brown wins over Campbell 
D) Brown wins over Adams and Campbell wins over Brown

Question 14

Robert and Neal are playing the ultimatum game, starting with $100. Based on the coin toss, Robert is the player to propose a division of the $100. If Robert acts as economic theory assumes and Neal acts as experimental evidence shows, Neal will

Accepted Answer

A) accept Robert's proposal of keeping $99 and offering Neal $1. 
B) accept Robert's proposal of keeping $60 and offering Neal $40. 
C) reject Robert's proposal of keeping $99 and offering Neal $1. 
D) reject Robert's proposal of keeping $60 and offering Neal $40. 
A) accept Robert's proposal of keeping $99 and offering Neal $1. 
B) accept Robert's proposal of keeping $60 and offering Neal $40. 
C) reject Robert's proposal of keeping $99 and offering Neal $1. 
D) reject Robert's proposal of keeping $60 and offering Neal $40.

Question 15

Researchers have found that the systematic mistakes that people make in their decision making include a lack of confidence in their own abilities.

Accepted Answer

A) True 
 B)False

Question 16

Economic theory assumes that voters, politicians, and other political participants are largely motivated by

Accepted Answer

A) personal self-interest. 
B) altruism. 
C) a desire to promote the general welfare. 
D) a desire to promote allocative economic efficiency. 
A) personal self-interest. 
B) altruism. 
C) a desire to promote the general welfare. 
D) a desire to promote allocative economic efficiency.

Question 17

People tend to wait until deadlines get close to work on projects in part because they believe that they can complete the projects in less time than it will actually take. Which findings from behavioral economics is this observation consistent with?

Accepted Answer

A) People tend to be time inconsistent and people tend to be overconfident. 
B) People tend to be time inconsistent but not that people tend to be overconfident. 
C) People tend to be overconfident, but not that people tend to be time inconsistent. 
D) Neither that people tend to be overconfident nor that people tend to be time inconsistent. 
A) People tend to be time inconsistent and people tend to be overconfident. 
B) People tend to be time inconsistent but not that people tend to be overconfident. 
C) People tend to be overconfident, but not that people tend to be time inconsistent. 
D) Neither that people tend to be overconfident nor that people tend to be time inconsistent.

Question 18

Assume there are nine voters in a certain small town and let x = the preferred number of dollars spent per person per month on garbage collection. For Voters 1, 2, and 3, x = $10; for Voter 4, x = $15; for Voter 5, x = $18; and for Voters 6, 7, 8 and 9, x = $20. Based on these preferences, which of these dollar amounts will win over any one of the others?

Accepted Answer

A) $10. 
B) $15. 
C) $18 
D) $20. 
A) $10. 
B) $15. 
C) $18 
D) $20.

Question 19

Suppose a community is debating how much money to spend on improvements to the high school. The members of the community who have children advocate spending $20 million to make improvements. The remaining 60% of the community thinks the high school is just fine and does not want to spend anything. What will the outcome be?

Accepted Answer

$0 spent o

Question 20

Scenario 22-3
​
At issue in a particular city vote is how much to spend, per person, on road repair next year. Among the 10,000 voters, 2,900 prefer to spend $500 per person, but no more; 2,200 prefer to spend $600 per person, but no more; 1,900 prefer to spend $800 per person, but no more; 1,600 prefer to spend $1,200 but no more, and 1,400 prefer to spend $1,400 per person, but no more.
-Refer to Scenario 22-3. If there is a vote on whether to spend $800 per person or $1,200 per person, the median voter will vote to spend

Accepted Answer

A) $800 per person and the voting outcome will be $800 per person. 
B) $800 per person and the voting outcome will be $1200 per person. 
C) $1200 per person and the voting outcome will be $800 per person. 
D) $1200 per person and the voting outcome will be $1200 per person. 
A) $800 per person and the voting outcome will be $800 per person. 
B) $800 per person and the voting outcome will be $1200 per person. 
C) $1200 per person and the voting outcome will be $800 per person. 
D) $1200 per person and the voting outcome will be $1200 per person.

Exam 22: Frontiers in Microeconomics

Evidence from experiments in which real people play the ultimatum game supports the idea that people

​A car mechanic knowing more about what's wrong with your vehicle than you do is best explained by which of the following concepts:

Asymmetric information, political economy, and behavioral economics

Advocates of a tax on soda and other sugary drinks argue that such a tax

The suggestion that people are "satisficers" is similar to the view that people

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 $22 win?

Which of the following practices would indicate that an employer is trying to overcome a moral-hazard problem with his employees?

Screening is an action taken by an uninformed party to induce an informed party to reveal information.

Which of the following is not correct?

Asymmetric information

Robert and Neal are playing the ultimatum game, starting with $100. Based on the coin toss, Robert is the player to propose a division of the $100. If Robert acts as economic theory assumes and Neal acts as experimental evidence shows, Neal will

Researchers have found that the systematic mistakes that people make in their decision making include a lack of confidence in their own abilities.

Economic theory assumes that voters, politicians, and other political participants are largely motivated by

People tend to wait until deadlines get close to work on projects in part because they believe that they can complete the projects in less time than it will actually take. Which findings from behavioral economics is this observation consistent with?

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Application

Supply, Demand, and Government Policies

Consumers, Producers, and the Efficiency of Markets

Applications: the Costs of Taxation

Application: International Trade

Externalities

Public Goods and Common Resources

The Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopoly

Monopolistic Competition

Oligopoly

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Measuring a Nation S Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

Tools of Finance

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

Filters

A car mechanic knowing more about what's wrong with your vehicle than you do is best explained by which of the following concepts: