Question 1

The Arrow impossibility theorem shows that

Accepted Answer

A)  democracy should be abandoned as a form of government. 
B)  it is impossible to improve upon democratic voting methods as a mechanism for social choice. 
C)  all voting systems are flawed as a mechanism for social choice. 
D)  the median voter's preferences will always win in a two-way vote. 
A)  democracy should be abandoned as a form of government. 
B)  it is impossible to improve upon democratic voting methods as a mechanism for social choice. 
C)  all voting systems are flawed as a mechanism for social choice. 
D)  the median voter's preferences will always win in a two-way vote.

Question 2

Table 22-11
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 22-11.Suppose before any voting takes place that alternative W is eliminated as an option.If the voters first choose between alternatives X and Y in a majority vote,with the winner of that vote going against option Z in a majority vote,which alternative would win?

Accepted Answer

A)  X 
B)  Y 
C)  Z 
D)  There would be no clear winner - alternatives X and Y would tie. 
A)  X 
B)  Y 
C)  Z 
D)  There would be no clear winner - alternatives X and Y would tie.

Question 3

The state of Massachusetts requires all citizens to purchase medical insurance or face a monetary penalty when filing their taxes.The penalty is significantly less than the average annual insurance premium.Moreover,the state requires insurance companies to issue policies to anyone who applies,regardless of their health at the time of application.Which of the following examples describes the inherent adverse selection problem?

Accepted Answer

A)  Tricia purchases an insurance policy through her employer and visits her doctor for annual check-ups. 
B)  Sue purchases insurance only after learning that she has cancer. 
C)  Mike pays the penalty rather than purchasing insurance because it is cheaper for him than paying insurance premiums and he is generally in good health. 
D)  Both b and c are correct. 
A)  Tricia purchases an insurance policy through her employer and visits her doctor for annual check-ups. 
B)  Sue purchases insurance only after learning that she has cancer. 
C)  Mike pays the penalty rather than purchasing insurance because it is cheaper for him than paying insurance premiums and he is generally in good health. 
D)  Both b and c are correct.

Question 4

If A is preferred to B and C is preferred to D,then B must be preferred to C to satisfy transitivity.

Accepted Answer

A) True 
 B)False

Question 5

One way that employers respond to the moral-hazard problem is by monitoring their employees.

Accepted Answer

A) True 
 B)False

Question 6

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.The median voter is

Accepted Answer

A)  Voter 3. 
B)  Voter 4. 
C)  Voter 5. 
D)  Voter 6. 
A)  Voter 3. 
B)  Voter 4. 
C)  Voter 5. 
D)  Voter 6.

Question 7

Studies of human decision-making have found that people do not give enough weight to a small number of vivid observations.

Accepted Answer

A) True 
 B)False

Question 8

Table 22-2
Three longtime friends-Jack, Ryan, and Colin-are deciding how they will spend their Sunday afternoon. They all agree that they should do one of three things: go to a movie, go to the zoo, or go to a museum. They also agree that they will have two pairwise votes to determine how to spend their evening, with the majority determining the outcome on each vote. The first, second, and third choices for each person are as indicated in the table below.
  
-Refer to Table 22-2.If (1)the first vote pits "baseball game" against "zoo," and (2)the second vote pits "movie" against the winner of the first vote,then

Accepted Answer

A)  "Baseball game" wins the first vote and "baseball game" wins the second vote, so they go to a baseball game. 
B)  "Baseball game" wins the first vote and "movie" wins the second vote, so they go to a movie. 
C)  "Zoo" wins the first vote and "zoo" wins the second vote, so they go to the zoo. 
D)  "Zoo" wins the first vote and "movie" wins the second vote, so they go to a movie. 
A)  "Baseball game" wins the first vote and "baseball game" wins the second vote, so they go to a baseball game. 
B)  "Baseball game" wins the first vote and "movie" wins the second vote, so they go to a movie. 
C)  "Zoo" wins the first vote and "zoo" wins the second vote, so they go to the zoo. 
D)  "Zoo" wins the first vote and "movie" wins the second vote, so they go to a movie.

Question 9

The Condorcet paradox demonstrates that the result of a majority vote may be affected by

Accepted Answer

A)  moral hazard. 
B)  adverse selection. 
C)  the order of the votes. 
D)  All of the above are correct. 
A)  moral hazard. 
B)  adverse selection. 
C)  the order of the votes. 
D)  All of the above are correct.

Question 10

Experiments show that when real people play the ultimatum game,starting with $100,

Accepted Answer

A)  Player A usually proposes giving Player B more than $50. 
B)  Player B usually accepts Player A's proposal if Player A proposes giving Player B $30 or $40. 
C)  players show themselves to be rational wealth-maximizers. 
D)  Both B and C are correct. 
A)  Player A usually proposes giving Player B more than $50. 
B)  Player B usually accepts Player A's proposal if Player A proposes giving Player B $30 or $40. 
C)  players show themselves to be rational wealth-maximizers. 
D)  Both B and C are correct.

Question 11

Table 22-3
The citizens of Anytown will decide whether to build a new library, a new community center, or a new ice rink. 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 22-3.Which of the following statements is correct?

Accepted Answer

A)  In a pairwise election, "ice rink" beats "library." 
B)  In a pairwise election, "library" beats "community center." 
C)  In a pairwise election, "community center" beats "ice rink." 
D)  All of the above are correct. 
A)  In a pairwise election, "ice rink" beats "library." 
B)  In a pairwise election, "library" beats "community center." 
C)  In a pairwise election, "community center" beats "ice rink." 
D)  All of the above are correct.

Question 12

When Republicans and Democrats offer similar platforms in an election campaign,a likely explanation is the

Accepted Answer

A)  Arrow impossibility theorem. 
B)  Condorcet paradox. 
C)  median voter theorem. 
D)  fact that politicians are more interested in the national interest than their own self-interest. 
A)  Arrow impossibility theorem. 
B)  Condorcet paradox. 
C)  median voter theorem. 
D)  fact that politicians are more interested in the national interest than their own self-interest.

Question 13

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 the results of the vote,the dollars spent per person per month on garbage collection will be

Accepted Answer

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

Question 14

In the field of study called political economy,economists make use of insights from the field of psychology.

Accepted Answer

A) True 
 B)False

Question 15

According to one survey 76 percent of Americans said they were not saving enough for retirement.This example of inconsistency over time

Accepted Answer

A)  is rational behavior. 
B)  likely occurs because saving requires a sacrifice in the present for a reward in the distant future. 
C)  likely occurs because Americans don't care about retirement. 
D)  definitely would not happen if Americans earned a greater return on their investments. 
A)  is rational behavior. 
B)  likely occurs because saving requires a sacrifice in the present for a reward in the distant future. 
C)  likely occurs because Americans don't care about retirement. 
D)  definitely would not happen if Americans earned a greater return on their investments.

Question 16

Table 22-11
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 22-11.In a majority vote between alternatives X and Y,what percentage of the votes would X receive?

Accepted Answer

A)  35% 
B)  45% 
C)  55% 
D)  65% 
A)  35% 
B)  45% 
C)  55% 
D)  65%

Question 17

Which of the following statements is correct?

Accepted Answer

A)  Hidden actions and hidden characteristics are both associated with the moral-hazard problem. 
B)  Hidden actions and hidden characteristics are both associated with the adverse-selection problem. 
C)  Hidden actions are associated with the moral-hazard problem, whereas hidden characteristics are associated with the adverse-selection problem. 
D)  Hidden actions are associated with the adverse-selection problem, whereas hidden characteristics are associated with the moral-hazard problem. 
A)  Hidden actions and hidden characteristics are both associated with the moral-hazard problem. 
B)  Hidden actions and hidden characteristics are both associated with the adverse-selection problem. 
C)  Hidden actions are associated with the moral-hazard problem, whereas hidden characteristics are associated with the adverse-selection problem. 
D)  Hidden actions are associated with the adverse-selection problem, whereas hidden characteristics are associated with the moral-hazard problem.

Question 18

One of the things that employers can do to lessen the moral hazard problem involving their employees is to pay them in advance for their work.

Accepted Answer

A) True 
 B)False

Question 19

Table 22-13
The fortunate residents of Anytown have a budget surplus. The mayor decided that it is only fair to have the residents vote on what to do with the surplus. The mayor has narrowed the options down to three possible projects: a playground, a library, or a swimming pool. The voters fall into three categories and have preferences as illustrated in the table.
  
-Refer to Table 22-13.If the mayor asks the residents to choose between the playground and the swimming pool using pairwise voting,

Accepted Answer

A)  the playground wins by 10%. 
B)  the playground wins by 45%. 
C)  the swimming pool wins by 10%. 
D)  the swimming pool wins by 55%. 
A)  the playground wins by 10%. 
B)  the playground wins by 45%. 
C)  the swimming pool wins by 10%. 
D)  the swimming pool wins by 55%.

Question 20

Scenario 22-1
At issue in a particular city vote is how much to spend, per person, on road repair next year. Among the 10,000 voters, 1,500 prefer to spend $300 per person, but no more; 2,800 prefer to spend $450 per person, but no more; 3,500 prefer to spend $800 per person, but no more; and 2,200 prefer to spend $1500 per person, but no more.
-Refer to Scenario 22-1.The median voter is one who prefers to spend

Accepted Answer

A)  $300. 
B)  $450. 
C)  $800. 
D)  $1500. 
A)  $300. 
B)  $450. 
C)  $800. 
D)  $1500.

The Arrow impossibility theorem shows that

If A is preferred to B and C is preferred to D,then B must be preferred to C to satisfy transitivity.

One way that employers respond to the moral-hazard problem is by monitoring their employees.

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.The median voter is

Studies of human decision-making have found that people do not give enough weight to a small number of vivid observations.

The Condorcet paradox demonstrates that the result of a majority vote may be affected by

Experiments show that when real people play the ultimatum game,starting with $100,

When Republicans and Democrats offer similar platforms in an election campaign,a likely explanation is the

In the field of study called political economy,economists make use of insights from the field of psychology.

According to one survey 76 percent of Americans said they were not saving enough for retirement.This example of inconsistency over time

Table 22-11 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 22-11.In a majority vote between alternatives X and Y,what percentage of the votes would X receive?

Which of the following statements is correct?

One of the things that employers can do to lessen the moral hazard problem involving their employees is to pay them in advance for their work.

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.

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.

Oligopoly.

The Market For the Factors of Production.

Earnings and Discrimination.

Income Inequality and Poverty.

The Theory of Consumer Choice.

Filters

Exam 22: Frontiers in Microeconomics.

The Arrow impossibility theorem shows that

If A is preferred to B and C is preferred to D,then B must be preferred to C to satisfy transitivity.

One way that employers respond to the moral-hazard problem is by monitoring their employees.

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.The median voter is

Studies of human decision-making have found that people do not give enough weight to a small number of vivid observations.

The Condorcet paradox demonstrates that the result of a majority vote may be affected by

Experiments show that when real people play the ultimatum game,starting with $100,

When Republicans and Democrats offer similar platforms in an election campaign,a likely explanation is the

In the field of study called political economy,economists make use of insights from the field of psychology.

According to one survey 76 percent of Americans said they were not saving enough for retirement.This example of inconsistency over time

Table 22-11 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 22-11.In a majority vote between alternatives X and Y,what percentage of the votes would X receive?

Which of the following statements is correct?

One of the things that employers can do to lessen the moral hazard problem involving their employees is to pay them in advance for their work.

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.

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.

Oligopoly.

The Market For the Factors of Production.

Earnings and Discrimination.

Income Inequality and Poverty.

The Theory of Consumer Choice.

Filters