Exam 22: Frontiers in Microeconomics.

Juanita is preparing to study for her economics final exam.She tells her friend that she will be happy if she just gets a B,even though she could likely earn an A if she studied harder.Juanita is what Herbert Simon would call a

Scenario 22-4 Suppose that residents of a town are asked to vote on the best way to improve the safety of an intersection. The three choices are: a stoplight, a 4-way stop, and a 2-way stop. The voters are divided into three groups based on their preferences. Voter Type -Refer to Scenario 22-4.Which of the following statements is correct regarding the Condorcet paradox and the results of pairwise voting on how to improve the safety of the intersection?

Which of the following relationships involves asymmetric information?

Which of the following is not an example of an adverse selection problem?

A radio story reported a study on the makes and models of cars that were observed going through intersections in the Washington,D.C.area without stopping at the stop signs.According to the story,Volvos were heavily overrepresented; the fraction of cars running stop signs that were Volvos was much greater than the fraction of Volvos in the total population of cars in the D.C.area.This is initially surprising because Volvo has built a reputation as an especially safe car that appeals to sensible,safety-conscious drivers.How is this observation best explained?

On car insurance policies,Countrywide Insurance Company offers drivers an option: Policy 1 features a deductible of $1,000,and it requires a driver to pay an annual premium of $500.Policy 2 features a deductible of $250,and it requires a driver to pay an annual premium of $1,000.

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.Suppose that,for some reason,D is eliminated as a possible option.Using a Borda count election,with 3 points for the best choice,2 points for the second best choice,and 1 point for the last choice,which outcome would win this election?

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.If the citizens of Anytown use a Borda count,rather than pairwise majority voting,to decide what to build,then they will build a new

Table 22-12 The following table shows the number of voters preferring various amounts of spending on a new school. -Refer to Table 22-12.Suppose the voters are asked to choose between $0.5 and $2.0.If all voters cast a vote for the spending amount closest to their own preference,which spending amount will win a majority of the votes?

Table 22-14 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 22-14.If Mr.Johnson wants to ensure that his 1st choice becomes the family's winning destination,he should propose

An example of signaling is a boyfriend giving an expensive,romantic gift to his girlfriend to convey his love for her.

An insurance company that writes automobile policies tries to separate safe drivers from risky drivers by offering policies that feature different deductibles and different premiums.This practice is best described as an example of

Suppose that in a Borda count election,outcome X is preferred to outcome Y,and outcome Y is preferred to outcome Z,when outcomes X,Y,and Z are all available options.When Y is removed as an option,however,outcome Z is preferred to outcome X.This would violate Arrow's assumption that voting systems should satisfy

Which of the following is not an example of asymmetric information?

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.

Employers may choose to pay their workers a wage that exceeds the equilibrium wage according to

A street vendor sells a replica of a designer handbag to a young woman who believes the handbag is authentic.The street vendor is engaging in

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.Which of the following statements is correct regarding the Condorcet paradox and the results of pairwise voting by Henry,Diane,and Linda?

Screening occurs when

When the buyer knows less than the seller about the characteristics of the good being sold,there is