Exam 22: Frontiers in Microeconomics.

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 voters first choose in a majority vote between W and X.Second,voters choose in a majority vote between the winner of the first vote and Y.Third,voters choose in a majority vote between the winner of the second vote and Z.Which alternative will win?

One implication of the Condorcet paradox is

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

When a jeweler sells a low quality diamond to a young man who believes the diamond is the highest quality,she is engaging in

Insurance companies charge annual premiums to collect revenue,which they then use to pay customers who file claims for damages they incur.Because of the moral hazard problem insurance companies separate customers into groups.Group 1: customers who file few claims & Group 2: customers that file a lot of claims.After creating these groups,what happens to the average annual premium within a group?

Table 22-8 -Refer to Table 22-8.The table shows the preferences of four types of voters over four possible outcomes: A,B,C,and D.In addition,the table shows the percentage of voters of each type.If the election is an instant runoff,the winner will be

The Condorcet paradox

Which of the following is not an example of moral hazard?

The Condorcet paradox shows that there is no scheme for aggregating individual preferences into a valid set of social preferences.

Moral hazard occurs when

An example of an information asymmetry is when a worker knows more than his employer about his work effort.

Your city newspaper publishes a "Best of" poll that lists its readers' favorite restaurants.Mundo Bar and Grill is ranked as the best casual restaurant.Your best friend had dinner at Mundo Bar and Grill last week and commented that the food was mediocre and the service was slow.You decide not to have dinner at Mundo Bar and Grill based on your friend's experience.Your decision illustrates that people

A driver knows more than his auto insurer about how cautiously he drives.This is an example of

Evidence points to the fact that,in the real world,people appear to care about fairness

Evidence from experiments in which real people play the ultimatum game supports the idea that people care about fairness as well as about maximization of their personal wealth.

Table 22-9 -Refer to Table 22-9.The table shows the preferences of 100 voters over three possible outcomes: A,B,and C.In pairwise majority voting in which voters choose first between A and B and then choose between the winner of the first vote and C,

When asymmetric information affects a relationship between two parties,it is always the case that

In economics,a difference in access to relevant knowledge is called a behavioral asymmetry.

Table 22-15 The town of Portsmouth is considering a renovation to the high school. The voters in Portsmouth have different preferences on the budget for the renovation as displayed below. -Refer to Table 22-15.If there is a vote between a budget of $12 million and $16 million,the median voter will vote to spend

Scenario 22-3 Three candidates, Frank, Brian, and Wanda, are running for office. There are three voters in the upcoming election: Henry, Diane, and Linda. Henry prefers Brian over Frank and Frank over Wanda. Diane prefers Wanda over Brian and Brian over Frank. Linda prefers Frank over Brian and Brian over Wanda. -Refer to Scenario 22-3.If the voters were given a choice of Frank versus Brian first,then the winner was in a second election versus Wanda,who would win?