Question 1

A worker who earns an above-equilibrium wage:

Accepted Answer

A) is less likely to shirk 
B) is more likely to shirk 
C) has little incentive to remain in his current job 
D) none of the above 
A) is less likely to shirk 
B) is more likely to shirk 
C) has little incentive to remain in his current job 
D) none of the above

Question 2

Results of the ultimatum game suggest that considerations of fairness may play a role in economic behaviour.

Accepted Answer

A) True 
 B)False

Question 3

The lack of caution exhibited by individuals and families who are privately insured is an example of moral hazard.

Accepted Answer

A) True 
 B)False

Question 4

Arrow's impossibility theorem suggests that:

Accepted Answer

A) any voting system society adopts for aggregating the preferences of its members will be flawed 
B) a voting system will be ideal if some form of dictatorship is allowed 
C) a voting system will be ideal if the properties of intransitivity and dependence of irrelevant alternatives are satisfied 
D) none of the above 
A) any voting system society adopts for aggregating the preferences of its members will be flawed 
B) a voting system will be ideal if some form of dictatorship is allowed 
C) a voting system will be ideal if the properties of intransitivity and dependence of irrelevant alternatives are satisfied 
D) none of the above

Question 5

What is adverse selection, and how is it applied to the used car market?

Accepted Answer

Adverse selection is a problem that aris

Question 6

Table 23 - 2
 $\begin{array}{|l|l|l|l|}\hline&&\text { Voter Type }\
\hline &\text { Type 1 } & \text { Type 2 } & \text { Type 3 } \
\hline \% \text { of electorate }&35 & 45 & 20 \
\hline 1^{\text {st }} \text { choice }&\text { C } & \text { A } & \text { B } \
\hline 2^{\text {nd }} \text { choice }&\text { A } & \text { B } & \text { C } \
\hline 3^{\mathrm{rd}} \text { choice }&\text { B } & \text { C } & \text { A } \
\hline
\end{array}$ Suppose a town is to vote on three possible locations for a new park: A, B, or C.The preferences are in table 23-2.Suppose the mayor decides on the following Borda count voting scheme: For each option, we will give one point for last place, two points for second last, and three points for the third last etc.The outcome with the most points is the winner.
-Refer to the information provided.The winner of this Borda count will be:

Accepted Answer

A) option A 
B) option B 
C) option C 
D) a tie between option A and $ B $ 
A) option A 
B) option B 
C) option C 
D) a tie between option A and $ B $

Question 7

Arrow's impossibility theorem suggests that any voting system society adopts for aggregating the preferences of its members will be flawed.

Accepted Answer

A) True 
 B)False

Question 8

The Condorcet paradox illustrates that majority voting by itself does not necessarily reveal what outcome society really wants.

Accepted Answer

A) True 
 B)False

Question 9

Table 23 - 2
 $\begin{array}{|l|l|l|l|}\hline&&\text { Voter Type }\
\hline &\text { Type 1 } & \text { Type 2 } & \text { Type 3 } \
\hline \% \text { of electorate }&35 & 45 & 20 \
\hline 1^{\text {st }} \text { choice }&\text { C } & \text { A } & \text { B } \
\hline 2^{\text {nd }} \text { choice }&\text { A } & \text { B } & \text { C } \
\hline 3^{\mathrm{rd}} \text { choice }&\text { B } & \text { C } & \text { A } \
\hline
\end{array}$ Suppose a town is to vote on three possible locations for a new park: A, B, or C.The preferences are in table 23-2.Suppose the mayor decides on the following Borda count voting scheme: For each option, we will give one point for last place, two points for second last, and three points for the third last etc.The outcome with the most points is the winner.
-refer to the information provided.The Borda count fails to satisfy which of Arrow's properties of a perfect voting system?

Accepted Answer

A) unanimity 
B) transitivity 
C) independence of irrelevant alternatives 
D) no dictators 
A) unanimity 
B) transitivity 
C) independence of irrelevant alternatives 
D) no dictators

Question 10

Private markets sometimes deal with asymmetric information through signalling and screening.

Accepted Answer

A) True 
 B)False

Question 11

Both adverse selection and signalling are linked to the problem of asymmetric information.

Accepted Answer

A) True 
 B)False

Exam 23: Frontiers of Microeconomics

A worker who earns an above-equilibrium wage:

Results of the ultimatum game suggest that considerations of fairness may play a role in economic behaviour.

The lack of caution exhibited by individuals and families who are privately insured is an example of moral hazard.

Arrow's impossibility theorem suggests that:

What is adverse selection, and how is it applied to the used car market?

Arrow's impossibility theorem suggests that any voting system society adopts for aggregating the preferences of its members will be flawed.

The Condorcet paradox illustrates that majority voting by itself does not necessarily reveal what outcome society really wants.

Private markets sometimes deal with asymmetric information through signalling and screening.

Both adverse selection and signalling are linked to the problem of asymmetric information.

Ten Lessons From 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

Application: 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

Business Strategy and Oligopoly

Competition Policy

The Markets for the Factors of Production

Earnings, Unions and Discrimination

Income Inequity and Poverty

The Theory of Consumer Choice

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment and the Financial System

The Natural Rate of Unemployment

The Monetary System

Inflation: Its Causes and Costs

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 Trade-Off Between Inflation and Unemployment

Global Financial Crisis of 2008 and Beyond

Five Debates Over Macroeconomic Policy

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