Exam 22: Frontiers of Microeconomics

Bob is a contestant on a trivia quiz show.For every state capital he can correctly identify,he will win $1,000.However,before identifying any capitals,he must decide how many he thinks he can correctly identify.If he cannot identify as many as he has wagered,Bob will not win any money.Suppose Bob says that he can correctly identify 42 state capitals for a potential payoff of $42,000.According to studies of human decision-making,what is most likely to happen?

One property of Kenneth Arrow's "perfect" voting system is that the ranking between any two outcomes A and B should not depend on whether some third outcome C is also available.Arrow called this property

Table 22-1 Three friends -- Tricia,Sarah,and Katie -- are deciding where to go together for vacation.They all agree that they should go to one of three places: Ireland,Italy,or Greece.They also agree that they will have two pairwise votes to determine where to go on vacation,with the majority determining the outcome on each vote.The first,second,and third choices for each person are as indicated in the table below. -Refer to Table 22-1.If the friends change their minds and decide to choose a vacation destination using a Borda count,then

Behavioral economics

Which of the following sets of preferences satisfies the property of transitivity?

Denzel travels a great deal,and over the past several years he has read dozens of reviews of hotel chains,all of which rave about the clean rooms and great service at Stay Here hotels.Last month,Denzel checked into a room at a Stay Here hotel for the first time,only to find the room filthy and the service lousy.He decided the Stay Here chain is inferior to other hotel chains.

Table 22-2 Three longtime friends-Fred,Barney,and Wilma-are deciding how they will spend their Sunday afternoon.They all agree that they should do one of three things: go to a movie,go to the beach,or go to a museum.They also agree that they will have two pairwise votes to determine how to spend their evening,with the majority determining the outcome on each vote.The first,second,and third choices for each person are as indicated in the table below. -Refer to Table 22-2.Which of the following statements is correct?

Economists have found that asymmetric information is not very prevalent.

Which of the following statements is correct?

Table 22-1 Three friends -- Tricia,Sarah,and Katie -- are deciding where to go together for vacation.They all agree that they should go to one of three places: Ireland,Italy,or Greece.They also agree that they will have two pairwise votes to determine where to go on vacation,with the majority determining the outcome on each vote.The first,second,and third choices for each person are as indicated in the table below. -Refer to Table 22-1.If the first vote pits Italy against Greece and the second vote pits Ireland against the winner of the first vote,then the outcome is as follows:

Condorcet explained his paradox in a 1951 book called Social Choice and Individual Values.

Which of the following is an example of satisficing behavior?

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

Insurance companies charge annual premiums to collect revenue,which they then use to pay customers who file claims for damages they incur.As a result of the moral hazard problem (1)what is the percentage of policy holders making claims,and (2)what is the average premium charged when compared to a world with no moral hazard problem?

The field of political economy

When a night watchman only performs two walk-throughs per night when he is being paid to perform five walk-throughs per night,it is an example of

The Arrow impossibility theorem shows that

Studies of human decision-making have found that people do not give enough weight to a small number of vivid observations.

The two major problems caused by asymmetric information are the moral-hazard problem and the principal-agent problem.

Table 22-9 -Refer to Table 22-9.The table shows the preferences of 100 voters over three possible outcomes: A,B,and C.Which of the following statements is true?