Question 1

What effect have recent developments in political economy shown

Accepted Answer

A) They have rendered much of the traditional field of political science obsolete. 
B) They have rendered much of the traditional field of economics obsolete. 
C) They have reaffirmed the good qualities of majority voting. 
D) They have pointed to the fact that government is a less-than-perfect institution. 
A) They have rendered much of the traditional field of political science obsolete. 
B) They have rendered much of the traditional field of economics obsolete. 
C) They have reaffirmed the good qualities of majority voting. 
D) They have pointed to the fact that government is a less-than-perfect institution.

Question 2

What outcome will a majority rule produce

Accepted Answer

A) an inconclusive outcome 
B) the outcome least preferred by the median voter 
C) the outcome most preferred by the median voter 
D) an outcome that is inconsistent with transitive preferences 
A) an inconclusive outcome 
B) the outcome least preferred by the median voter 
C) the outcome most preferred by the median voter 
D) an outcome that is inconsistent with transitive preferences

Question 3

Which practice would indicate that an employer is trying to overcome a moral hazard problem with respect to her employees

Accepted Answer

A) The employer pays wages to her workers that are unusually high for the industry and region. 
B) The employer has voluntarily removed video cameras from the factory floor. 
C) The employer has discontinued the practice of giving year-end bonuses to her employees. 
D) The employer has hired a mediator to resolve union grievances. 
A) The employer pays wages to her workers that are unusually high for the industry and region. 
B) The employer has voluntarily removed video cameras from the factory floor. 
C) The employer has discontinued the practice of giving year-end bonuses to her employees. 
D) The employer has hired a mediator to resolve union grievances.

Question 4

In his 1951 book Social Choice and Individual Values,what does Kenneth Arrow use the term "unanimity" to mean

Accepted Answer

A) A beats B only if everyone prefers A to B. 
B) If everyone prefers A to B, then A beats B. 
C) He uses it to mean the same thing as transitivity. 
D) Everyone who is eligible to vote must vote; otherwise, the outcome is invalid. 
A) A beats B only if everyone prefers A to B. 
B) If everyone prefers A to B, then A beats B. 
C) He uses it to mean the same thing as transitivity. 
D) Everyone who is eligible to vote must vote; otherwise, the outcome is invalid.

Question 5

Who is a "satisficer"

Accepted Answer

A) a person who always chooses the best course of action 
B) a person who often chooses the worst course of action 
C) a person who makes decisions that are merely good enough 
D) a person who always avoids the best course of action 
A) a person who always chooses the best course of action 
B) a person who often chooses the worst course of action 
C) a person who makes decisions that are merely good enough 
D) a person who always avoids the best course of action

Question 6

"Signalling" refers to actions by an informed party for what sole purpose

Accepted Answer

A) telling another party that the signaller has information to reveal, without actually revealing that information 
B) conveying false information 
C) confusing another party 
D) credibly revealing private information 
A) telling another party that the signaller has information to reveal, without actually revealing that information 
B) conveying false information 
C) confusing another party 
D) credibly revealing private information

Question 7

When does screening occur

Accepted Answer

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

Question 8

Why do private markets not provide adequate amounts of medical insurance for everyone

Accepted Answer

A) Only low-risk people will buy insurance. 
B) High-risk people will not buy insurance because the premium is too high. 
C) People in average health will buy insurance due to the low cost. 
D) Higher risk people will buy insurance but not the lower risk people. 
A) Only low-risk people will buy insurance. 
B) High-risk people will not buy insurance because the premium is too high. 
C) People in average health will buy insurance due to the low cost. 
D) Higher risk people will buy insurance but not the lower risk people.

Question 9

When real people play the ultimatum game,starting with $100,what usually results

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) They always split it evenly so each gets $50. 
D) Player B usually rejects Player A's proposal regardless of the amount. 
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) They always split it evenly so each gets $50. 
D) Player B usually rejects Player A's proposal regardless of the amount.

Question 10

What characteristic best describes asymmetric information

Accepted Answer

A) It is rare in economic transactions, but it is common in other aspects of life. 
B) It can take the form of a hidden action or a hidden characteristic. 
C) It always involves an employer-employee relationship. 
D) It is a larger problem for firms than for consumers. 
A) It is rare in economic transactions, but it is common in other aspects of life. 
B) It can take the form of a hidden action or a hidden characteristic. 
C) It always involves an employer-employee relationship. 
D) It is a larger problem for firms than for consumers.

Question 11

Nine voters are voting on a spending level for a local school. They are fully informed about the type of taxes that are involved to support the spending. Their preferences are given by the table below. All voters always prefer outcomes close to their most preferred value to outcomes farther away.
  
Given these preferences, what outcome would you expect democracy to produce? Carefully explain your answer.

Accepted Answer

According to the median voter

Question 12

Table 22-2
Voters are deciding how they will spend the City of Elmongary's budget surplus.They have enough money to build one of three projects: build a school, build a skate park, or build a bike lane for commuters.They agree that they will have two pairwise votes to determine how to spend their budget, with the majority determining the outcome on each vote.The first, second, and third choices for each project are as indicated in the table below.  
-Refer to Table 22-2.What is a possible outcome in a pairwise election

Accepted Answer

A) In a pairwise election, "bike lane" beats "skate park." 
B) In a pairwise election, "school" beats "bike lane." 
C) In a pairwise election, "skate park" beats "bike lane." 
D) In a pairwise election, "skate park" beats "school." 
A) In a pairwise election, "bike lane" beats "skate park." 
B) In a pairwise election, "school" beats "bike lane." 
C) In a pairwise election, "skate park" beats "bike lane." 
D) In a pairwise election, "skate park" beats "school."

Question 13

When new professors are hired,their job performance is monitored closely.If they meet their institution's standards,they will eventually receive tenure.After receiving tenure,professors' job performance is less closely monitored,and they become difficult to fire.What does tenure create

Accepted Answer

A) adverse selection 
B) Condorcet's paradox 
C) a screening paradox 
D) moral hazard 
A) adverse selection 
B) Condorcet's paradox 
C) a screening paradox 
D) moral hazard

Question 14

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

Accepted Answer

A) only when it coincides with their own self-interest 
B) only when it coincides with their determination to be consistent over time 
C) even when it does not coincide with their own self-interest 
D) even when it coincides with their own self-interest over time 
A) only when it coincides with their own self-interest 
B) only when it coincides with their determination to be consistent over time 
C) even when it does not coincide with their own self-interest 
D) even when it coincides with their own self-interest over time

Question 15

The fact that many people procrastinate is very consistent with which idea

Accepted Answer

A) People are rational decision-makers. 
B) People save large portions of their income. 
C) People are inconsistent over time. 
D) People don't change their preferences over time. 
A) People are rational decision-makers. 
B) People save large portions of their income. 
C) People are inconsistent over time. 
D) People don't change their preferences over time.

Question 16

Robert borrowed $15,000 from Granite Bank,telling the loan officer that he intended to use the money to make repairs to his home.After getting the loan,Robert and his girlfriend immediately took the $15,000 and headed to Las Vegas for a weekend of gambling and entertainment.Which statement best characterizes this principal and agent problem

Accepted Answer

A) This is a problem of moral hazard, but it is not a problem of asymmetric information. 
B) This is a problem of asymmetric information, but it is not a problem of moral hazard. 
C) From the given information, it is correct to say that Robert is a principal and that his girlfriend is an agent. 
D) From the given information, it is correct to say that Granite Bank is a principal and that Robert is an agent. 
A) This is a problem of moral hazard, but it is not a problem of asymmetric information. 
B) This is a problem of asymmetric information, but it is not a problem of moral hazard. 
C) From the given information, it is correct to say that Robert is a principal and that his girlfriend is an agent. 
D) From the given information, it is correct to say that Granite Bank is a principal and that Robert is an agent.

Question 17

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.

Accepted Answer

A) True 
 B)False

Question 18

The Condorcet voting paradox is that democratic outcomes do not always obey which of the following properties

Accepted Answer

A) homogeneity of preferences 
B) concavity of preferences 
C) asymmetry of preferences 
D) transitivity of preferences 
A) homogeneity of preferences 
B) concavity of preferences 
C) asymmetry of preferences 
D) transitivity of preferences

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

Normally,what property do we expect voters' preferences to exhibit

Accepted Answer

A) transitivity 
B) homogeneity 
C) normality 
D) universality 
A) transitivity 
B) homogeneity 
C) normality 
D) universality

What effect have recent developments in political economy shown

What outcome will a majority rule produce

Which practice would indicate that an employer is trying to overcome a moral hazard problem with respect to her employees

In his 1951 book Social Choice and Individual Values,what does Kenneth Arrow use the term "unanimity" to mean

Who is a "satisficer"

"Signalling" refers to actions by an informed party for what sole purpose

When does screening occur

Why do private markets not provide adequate amounts of medical insurance for everyone

When real people play the ultimatum game,starting with $100,what usually results

What characteristic best describes asymmetric information

When new professors are hired,their job performance is monitored closely.If they meet their institution's standards,they will eventually receive tenure.After receiving tenure,professors' job performance is less closely monitored,and they become difficult to fire.What does tenure create

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

The fact that many people procrastinate is very consistent with which idea

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.

The Condorcet voting paradox is that democratic outcomes do not always obey which of the following properties

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

Normally,what property do we expect voters' preferences to exhibit

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 Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Filters

Exam 22: Frontiers of Microeconomics

What effect have recent developments in political economy shown

What outcome will a majority rule produce

Which practice would indicate that an employer is trying to overcome a moral hazard problem with respect to her employees

In his 1951 book Social Choice and Individual Values,what does Kenneth Arrow use the term "unanimity" to mean

Who is a "satisficer"

"Signalling" refers to actions by an informed party for what sole purpose

When does screening occur

Why do private markets not provide adequate amounts of medical insurance for everyone

When real people play the ultimatum game,starting with $100,what usually results

What characteristic best describes asymmetric information

When new professors are hired,their job performance is monitored closely.If they meet their institution's standards,they will eventually receive tenure.After receiving tenure,professors' job performance is less closely monitored,and they become difficult to fire.What does tenure create

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

The fact that many people procrastinate is very consistent with which idea

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.

The Condorcet voting paradox is that democratic outcomes do not always obey which of the following properties

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

Normally,what property do we expect voters' preferences to exhibit

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 Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Filters