Question 1

Which of the following is an example of signaling?

Accepted Answer

A)  Graduates of highly-respected universities highlight that fact on their resumes. 
B)  Magazine advertisements include the phrase "as seen on TV." 
C)  Advertisements for universities include the phrase "fully accredited." 
D)  All of the above are correct. 
A)  Graduates of highly-respected universities highlight that fact on their resumes. 
B)  Magazine advertisements include the phrase "as seen on TV." 
C)  Advertisements for universities include the phrase "fully accredited." 
D)  All of the above are correct.

Question 2

"Signaling" refers to actions by an informed party for the sole purpose of

Accepted Answer

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

Question 3

According to the median voter theorem,majority rule will produce an outcome that is inconsistent with transitive preferences.

Accepted Answer

A) True 
 B)False

Question 4

If the seller of a used car offers a limited warranty,the warranty is an example of a(n)

Accepted Answer

A)  signal. 
B)  screen. 
C)  efficiency wage. 
D)  agent. 
A)  signal. 
B)  screen. 
C)  efficiency wage. 
D)  agent.

Question 5

One implication of the Condorcet paradox is

Accepted Answer

A)  that the order in which things are voted on can affect the result. 
B)  that the order in which things are voted on is irrelevant. 
C)  that you do not want to be in charge of arranging which items are voted upon first. 
D)  that when there are only two items being voted on the order matters. 
A)  that the order in which things are voted on can affect the result. 
B)  that the order in which things are voted on is irrelevant. 
C)  that you do not want to be in charge of arranging which items are voted upon first. 
D)  that when there are only two items being voted on the order matters.

Question 6

Based on studies of human decision making,many people care more about the fairness of a game than about their personal winnings.

Accepted Answer

A) True 
 B)False

Question 7

Table 22-4
Five voters must choose from among four options: A,B,C,or D.Each voter's preferences are summarized in the table below.Options higher in the table are more preferred by the voter.
  
-Refer to Table 22-4.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 A would win. 
B)  that B would win. 
C)  that C would win. 
D)  a tie between A and D. 
A)  that A would win. 
B)  that B would win. 
C)  that C would win. 
D)  a tie between A and D.

Question 8

Economist Kenneth Arrow wrote a famous book in 1951 in which he took up the question,

Accepted Answer

A)  Is there a perfect voting system? 
B)  Are preferences transitive? 
C)  Is a dictatorship a good form of government? 
D)  Should the president of the United States be elected to a single,six-year term? 
A)  Is there a perfect voting system? 
B)  Are preferences transitive? 
C)  Is a dictatorship a good form of government? 
D)  Should the president of the United States be elected to a single,six-year term?

Question 9

How have insights from the field of psychology influenced the thinking of economists in recent years?

Accepted Answer

Insights from psychology have led some e

Question 10

In his 1951 book,Social Choice and Individual Values,Kenneth Arrow defined a "perfect" voting system.That system includes which of the following features?

Accepted Answer

A)  unanimity 
B)  transitivity 
C)  absence of a dictator 
D)  All of the above are correct. 
A)  unanimity 
B)  transitivity 
C)  absence of a dictator 
D)  All of the above are correct.

Question 11

Table 22-6
  
-Refer to Table 22-6.The table shows the preferences for three types of voters over three possible outcomes: X,Y,and Z.The table also shows the percentage of voters of each type.Based on this information,which of the following statements is true?

Accepted Answer

A)  In a vote between X and Y,X loses since only the Type 1 voters prefer X to Y. 
B)  In a vote between Y and Z,Y wins getting 80% of the total vote. 
C)  In a vote between X and Z,X loses getting only 45% of the total vote. 
D)  Both a and b 
A)  In a vote between X and Y,X loses since only the Type 1 voters prefer X to Y. 
B)  In a vote between Y and Z,Y wins getting 80% of the total vote. 
C)  In a vote between X and Z,X loses getting only 45% of the total vote. 
D)  Both a and b

Question 12

The Condorcet paradox

Accepted Answer

A)  demonstrates that the order in which one votes on options may influence the outcome. 
B)  demonstrates that majority voting by itself may not reveal the outcome that society wants. 
C)  disproves Arrow's impossibility theorem. 
D)  Both a and b are correct. 
A)  demonstrates that the order in which one votes on options may influence the outcome. 
B)  demonstrates that majority voting by itself may not reveal the outcome that society wants. 
C)  disproves Arrow's impossibility theorem. 
D)  Both a and b are correct.

Question 13

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.If the first vote pits a 2-way stop against a stoplight and the second vote pits a 4-way stop against the winner of the first vote,then the outcome is as follows:

Accepted Answer

A)  2-way stop wins the first vote and 2-way stop wins the second vote,so the town installs a 2-way stop. 
B)  2-way stop wins the first vote and 4-way stop wins the second vote,so the town installs a 4-way stop. 
C)  Stoplight wins the first vote and stoplight wins the second vote,so the town installs a stoplght. 
D)  Stoplight wins the first vote and 4-way stop wins the second vote,so the town installs a 4-way stop. 
A)  2-way stop wins the first vote and 2-way stop wins the second vote,so the town installs a 2-way stop. 
B)  2-way stop wins the first vote and 4-way stop wins the second vote,so the town installs a 4-way stop. 
C)  Stoplight wins the first vote and stoplight wins the second vote,so the town installs a stoplght. 
D)  Stoplight wins the first vote and 4-way stop wins the second vote,so the town installs a 4-way stop.

Question 14

Because people with hidden health problems are more likely to buy health insurance than are other people,

Accepted Answer

A)  the price of health insurance reflects the costs of a sicker-than-average person. 
B)  the price of health insurance is too low,relative to the socially-optimal price. 
C)  people in average health may be encouraged to buy too much health insurance,relative to the socially-optimal quantity. 
D)  the Condorcet Paradox suggests that people who are sicker than average will ultimately buy more health insurance. 
A)  the price of health insurance reflects the costs of a sicker-than-average person. 
B)  the price of health insurance is too low,relative to the socially-optimal price. 
C)  people in average health may be encouraged to buy too much health insurance,relative to the socially-optimal quantity. 
D)  the Condorcet Paradox suggests that people who are sicker than average will ultimately buy more health insurance.

Question 15

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.

Question 16

Evidence from studies of workers' choices on whether to participate in 401(k)plans
Suggests that the workers' behavior appears to exhibit

Accepted Answer

A)  indifference. 
B)  ignorance. 
C)  inertia. 
D)  indecision. 
A)  indifference. 
B)  ignorance. 
C)  inertia. 
D)  indecision.

Question 17

Table 22-8
  
-Refer to Table 22-8.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 a Borda count election is held in which each voter ranks the four outcomes,giving 1 point to last place,2 points to second to last,3 points to the second best,and 4 points to the best.In this case,which outcome would win?

Accepted Answer

A)  W 
B)  X 
C)  Y 
D)  Z 
A)  W 
B)  X 
C)  Y 
D)  Z

Question 18

An efficiency wage

Accepted Answer

A)  gives an employee an incentive to shirk his duties. 
B)  is lower than the equilibrium wage for that position and region. 
C)  is higher than the equilibrium wage for that position and region. 
D)  both a and b are correct. 
A)  gives an employee an incentive to shirk his duties. 
B)  is lower than the equilibrium wage for that position and region. 
C)  is higher than the equilibrium wage for that position and region. 
D)  both a and b are correct.

Question 19

One likely motivation for politicians to pass the 2002 Farm Security Act was

Accepted Answer

A)  to improve national security. 
B)  to provide price stability for farmers. 
C)  votes from constituents who benefit from the Act. 
D)  Both b and c are correct. 
A)  to improve national security. 
B)  to provide price stability for farmers. 
C)  votes from constituents who benefit from the Act. 
D)  Both b and c are correct.

Question 20

Suppose a group of people read an article on capital punishment.Prior to reading the article,60% of the members of the group were opposed to capital punishment,while 40% of the members of the group were in favor of capital punishment.According to studies of human decision-making,which of the following is likely?

Accepted Answer

A)  After reading the article,all members of the group oppose capital punishment. 
B)  After reading the article,all members of the group are in favor of capital punishment. 
C)  After reading the article,60% of the members of the group are opposed and 40% of the members of the group are in favor of capital punishment. 
D)  The members of the group would elect a representative in favor of capital punishment. 
A)  After reading the article,all members of the group oppose capital punishment. 
B)  After reading the article,all members of the group are in favor of capital punishment. 
C)  After reading the article,60% of the members of the group are opposed and 40% of the members of the group are in favor of capital punishment. 
D)  The members of the group would elect a representative in favor of capital punishment.

Exam 22: Frontiers of Microeconomics

Which of the following is an example of signaling?

"Signaling" refers to actions by an informed party for the sole purpose of

According to the median voter theorem,majority rule will produce an outcome that is inconsistent with transitive preferences.

If the seller of a used car offers a limited warranty,the warranty is an example of a(n)

One implication of the Condorcet paradox is

Based on studies of human decision making,many people care more about the fairness of a game than about their personal winnings.

Economist Kenneth Arrow wrote a famous book in 1951 in which he took up the question,

How have insights from the field of psychology influenced the thinking of economists in recent years?

In his 1951 book,Social Choice and Individual Values,Kenneth Arrow defined a "perfect" voting system.That system includes which of the following features?

Table 22-6 -Refer to Table 22-6.The table shows the preferences for three types of voters over three possible outcomes: X,Y,and Z.The table also shows the percentage of voters of each type.Based on this information,which of the following statements is true?

The Condorcet paradox

Because people with hidden health problems are more likely to buy health insurance than are other people,

Evidence from studies of workers' choices on whether to participate in 401(k)plans Suggests that the workers' behavior appears to exhibit

An efficiency wage

One likely motivation for politicians to pass the 2002 Farm Security Act was

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

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

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