Question 1

Behavioral economics

Accepted Answer

A) integrates psychological insights into economic models. 
B) relies on the assumption that homo economicus describes economic decision-making. 
C) assumes that economic agents have full information about the conditions surrounding their decisions. 
D) All of the above are correct. 
A) integrates psychological insights into economic models. 
B) relies on the assumption that homo economicus describes economic decision-making. 
C) assumes that economic agents have full information about the conditions surrounding their decisions. 
D) All of the above are correct.

Question 2

Herbert Simon suggested that humans should be viewed not as rational maximizers but as

Accepted Answer

A) irrational maximizers. 
B) rational minimizers. 
C) irrational minimizers. 
D) satisficers. 
A) irrational maximizers. 
B) rational minimizers. 
C) irrational minimizers. 
D) satisficers.

Question 3

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 4

Screening occurs when

Accepted Answer

A) an informed party acts to reveal his private information. 
B) an informed party acts to conceal his private information. 
C) an uninformed party acts to induce the informed party to reveal private information. 
D) one informed party acts to prevent another informed party from revealing private information. 
A) an informed party acts to reveal his private information. 
B) an informed party acts to conceal his private information. 
C) an uninformed party acts to induce the informed party to reveal private information. 
D) one informed party acts to prevent another informed party from revealing private information.

Question 5

The Condorcet voting paradox demonstrates that democratic outcomes do not always obey the property of

Accepted Answer

A) narrowness of preferences. 
B) concavity of preferences. 
C) asymmetry of preferences. 
D) transitivity of preferences. 
A) narrowness of preferences. 
B) concavity of preferences. 
C) asymmetry of preferences. 
D) transitivity of preferences.

Question 6

Which voter is the voter whose views on a policy issue are in the middle of the spectrum,with half of the voters on one side of this voter's view and half on the other side.

Accepted Answer

A) Average voter 
B) Mean voter 
C) Arrow voter 
D) Median voter 
A) Average voter 
B) Mean voter 
C) Arrow voter 
D) Median voter

Question 7

Effective signals

Accepted Answer

A) convey useful information from informed parties to uninformed parties. 
B) impose little or no cost on the signaler. 
C) cannot be conveyed accurately when there is an information asymmetry. 
D) can be used by employers to alleviate the moral hazard problem in the workplace. 
A) convey useful information from informed parties to uninformed parties. 
B) impose little or no cost on the signaler. 
C) cannot be conveyed accurately when there is an information asymmetry. 
D) can be used by employers to alleviate the moral hazard problem in the workplace.

Question 8

Table 22-5
  
-Refer to Table 22-5.The table shows the preferences of four types of voters over four possible outcomes: W,X,Y,and Z.In addition,the table shows the percentage of voters of each type.Suppose that,for some reason,W 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?

Accepted Answer

A) X 
B) Y 
C) Z 
D) There would be a three-way tie. 
A) X 
B) Y 
C) Z 
D) There would be a three-way tie.

Question 9

Scenario 22-2
Five voters must choose from among four options: W, X, Y, or Z. Each voter's preferences are summarized in the table below. Options higher in the table are more preferred by the voter.
  
-Refer to Scenario 22-2.If the vote were conducted according to a Borda count system where each person's first choice receives 4 points,second choice 3 points,third choice 2 points and fourth choice 1 point,the result would be

Accepted Answer

A) that W would win. 
B) that Y would win. 
C) that Z would win. 
D) a tie between W and Z. 
A) that W would win. 
B) that Y would win. 
C) that Z would win. 
D) a tie between W and Z.

Question 10

Suppose that you major in physics because potential employers perceive that it is harder than other majors.Assuming education has no real value,your majoring in physics provides potential employers with

Accepted Answer

A) a signal. 
B) a screen. 
C) a potential moral hazard. 
D) a potential adverse selection. 
A) a signal. 
B) a screen. 
C) a potential moral hazard. 
D) a potential adverse selection.

Question 11

Table 22-6
  
-Refer to Table 22-6.The table shows the preferences of 100 voters over three possible outcomes: X,Y,and Z.Suppose a Borda count election was held among these voters and that the only outcomes from which the voters may choose are outcome X and outcome Z.Which of the following statements is true?

Accepted Answer

A) While outcome X is preferred to outcome Z when all three choices are available, outcome Z is preferred to outcome X when outcome Y is eliminated as a possible choice. 
B) Outcome X is preferred to outcome Z when all three choices are available, and outcome X is still preferred to outcome Z when outcome Y is eliminated as a possible choice. 
C) While outcome Z is preferred to outcome X when all three choices are available, outcome X is preferred to outcome Z when outcome Y is eliminated as a possible choice. 
D) Outcome Z is preferred to outcome X when all three choices are available, and outcome Z is preferred to outcome X when outcome Y is eliminated as a possible choice. 
A) While outcome X is preferred to outcome Z when all three choices are available, outcome Z is preferred to outcome X when outcome Y is eliminated as a possible choice. 
B) Outcome X is preferred to outcome Z when all three choices are available, and outcome X is still preferred to outcome Z when outcome Y is eliminated as a possible choice. 
C) While outcome Z is preferred to outcome X when all three choices are available, outcome X is preferred to outcome Z when outcome Y is eliminated as a possible choice. 
D) Outcome Z is preferred to outcome X when all three choices are available, and outcome Z is preferred to outcome X when outcome Y is eliminated as a possible choice.

Question 12

Table 22-4
  
-Refer to Table 22-4.The table shows the most preferred budget of 75 voters.In an election,each voter will select the budget closest to his or her most preferred budget.Using this information,what is the most preferred budget of the median voter?

Accepted Answer

A) $10 
B) $20 
C) $30 
D) $40 
A) $10 
B) $20 
C) $30 
D) $40

Question 13

John goes to work 8 hours per day,but while he is at work he spends most of his time visiting internet sites that provide him with information on his favorite hobby.This is an example of

Accepted Answer

A) the Condorcet Paradox. 
B) signaling. 
C) moral hazard. 
D) screening. 
A) the Condorcet Paradox. 
B) signaling. 
C) moral hazard. 
D) screening.

Question 14

Studies of human decision-making have detected systematic mistakes that people make.Which of the following have been detected?

Accepted Answer

A) people are overconfident 
B) people give too much weight to a small number of vivid observations 
C) people are reluctant to change their minds 
D) All of the above 
A) people are overconfident 
B) people give too much weight to a small number of vivid observations 
C) people are reluctant to change their minds 
D) All of the above

Question 15

Scenario 22-3
The following table shows the preferences for the five voters in a city regarding how to deal with the city's diseased trees.
   
A = do nothing
B = Follow the expert's advice to remove every tree
C = remove every 4th tree now and perhaps more later
D = use an untested spraying alternative
-Refer to Scenario 22-3.Consider the public policy for dealing with the diseased trees.Using pairwise majority voting with A versus B,then the winner of that vote versus C,then the winner of that vote versus D,which policy wins?

Accepted Answer

A) A 
B) B 
C) C 
D) D 
A) A 
B) B 
C) C 
D) D

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

Moral hazard occurs when

Accepted Answer

A) an employer closely monitors an employee. 
B) two people consider a trade with each other and one person has relevant information about some aspect of the product's quality that the other person lacks. 
C) an employee lacks an incentive to promote the best interests of the employer, and the employer cannot observe the actions of the employee. 
D) an employee closely monitors the actions of their employer. 
A) an employer closely monitors an employee. 
B) two people consider a trade with each other and one person has relevant information about some aspect of the product's quality that the other person lacks. 
C) an employee lacks an incentive to promote the best interests of the employer, and the employer cannot observe the actions of the employee. 
D) an employee closely monitors the actions of their employer.

Question 18

A "satisficer" is a person whose decisionmaking is the same as that predicted by mainstream economic models.

Accepted Answer

A) True 
 B)False

Question 19

The Condorcet paradox

Accepted Answer

A) proved that the Arrow impossibility theorem is wrong. 
B) was proved wrong by the Arrow impossibility theorem. 
C) serves as an example of the Arrow impossibility theorem. 
D) pertains to voting systems, whereas Arrow's Impossibility Theorem does not. 
A) proved that the Arrow impossibility theorem is wrong. 
B) was proved wrong by the Arrow impossibility theorem. 
C) serves as an example of the Arrow impossibility theorem. 
D) pertains to voting systems, whereas Arrow's Impossibility Theorem does not.

Question 20

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.

Exam 22: Frontiers of Microeconomics

Behavioral economics

Herbert Simon suggested that humans should be viewed not as rational maximizers but as

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

Screening occurs when

The Condorcet voting paradox demonstrates that democratic outcomes do not always obey the property of

Which voter is the voter whose views on a policy issue are in the middle of the spectrum,with half of the voters on one side of this voter's view and half on the other side.

Effective signals

Suppose that you major in physics because potential employers perceive that it is harder than other majors.Assuming education has no real value,your majoring in physics provides potential employers with

Table 22-4 -Refer to Table 22-4.The table shows the most preferred budget of 75 voters.In an election,each voter will select the budget closest to his or her most preferred budget.Using this information,what is the most preferred budget of the median voter?

John goes to work 8 hours per day,but while he is at work he spends most of his time visiting internet sites that provide him with information on his favorite hobby.This is an example of

Studies of human decision-making have detected systematic mistakes that people make.Which of the following have been detected?

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

Moral hazard occurs when

A "satisficer" is a person whose decisionmaking is the same as that predicted by mainstream economic models.

The Condorcet paradox

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

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Applications

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

Oligopoly

Monopolistic Competition

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality 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 Basic Tools of Finance

Unemployment

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 Trade Off Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

Filters