Exam 22: Frontiers of Microeconomics

Table 22-14 Amy, Beth, and Connie are on a hiring committee. They have interviewed 3 candidates identified by their last names and are going to vote on which one is hired. -Refer to Table 22-14. What would the results of a Borda Count vote be?

Suppose that an economics professor selects two students, Audrey and Michael, to participate in a classroom experiment. The professor gives Audrey twenty $1 bills. Audrey must pick an allocation of the twenty $1 bills to offer to Michael. If Michael accepts the allocation, each student keeps his or her portion of the money. If Michael rejects the allocation, the professor keeps the $20, and each student receives nothing. Audrey selects $19 for herself and $1 for Michael. Based on the studies of human decision making, which of the following statements is correct?

The problem that arises when one person performs a task on behalf of another person is called the lemons problem.

Harold has always driven cars made by Universal Motors. The last two Universal Motors cars that Harold purchased have had major engine problems resulting in Harold incurring significant cost. Consumer Reports has consistently given Universal Motors poor ratings. Still, Harold plans to purchase another Universal Motors car next fall. Harold's behavior is an example of which systematic mistake that people make?

Table 22-16 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 22-16. If the family uses a Borda count to make their decision, what is their vacation destination?

Bob is planning to sell his home. In preparation for the sale, he paints all of the ceilings in his house to cover up water stains from his leaking roof so that potential buyers will be unaware of this problem. This is an example of

Table 22-5 The citizens of Anytown will decide whether to build a new library, a recreation center, or an arena. 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. Voter Type -Refer to Table 22-5. Which of the following statements is correct regarding the Condorcet paradox and the results of pairwise voting in Anytown?

Table 22-12 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 Table 22-12. Consider the public policy for dealing with the diseased trees. Using a Borda count with 4 points assigned to the first choice, 3 points assigned to the second choice, 2 points assigned to the third choice, and 1 point assigned to the fourth choice, which policy wins?

Table 22-25 Sophie, Huan, and Santiago are lost with no map or GPS available. They come to an intersection at which they can turn left, turn right, or continue going straight. Their preferences are summarized in the table. -Refer to Table 22-25. The travelers decide to conduct pairwise voting with the majority determining the outcome of each vote to decide their next move. Sophie is very confident that the travelers need to go left but she is having a difficult time convincing her friends. If she wants to ensure that the result of the voting is "left," how should she organize the voting?

Scenario 22-4 Three members of the DiCarlo family, Vinny, Maria, and Franki, are choosing the entree for a large family reunion. Their options are: spaghetti, ravioli, lasagne, and pizza. Vinny prefers spaghetti over lasagne, lasagne over ravioli, and ravioli over pizza. Maria prefers ravioli over spaghetti, spaghetti over pizza, and pizza over lasagne. Frankie prefers pizza over ravioli, ravioli over lasagne, and lasagne over spaghetti. -Refer to Scenario 22-4. If, before any votes were cast, ravioli was eliminated from the choices and the vote were conducted according to a Borda count system where each person's first choice receives 3 points, second choice 2 points, and third choice 1 point, the election winner would be

Table 22-16 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 22-16. Suppose that before the family can arrive at their decision, Opryland announced that it will be closed for the season due to flooding. Mr. Johnson recommends using a vote by majority rule and proposes first choosing between the Grand Canyon and Sea World, and then choosing between the winner of the first vote and Disneyland. If everyone votes according to their preferences,

Table 22-13 A high school Spanish class and their teacher are planning to take a Spring Break trip abroad but they have to decide where to go. They have narrowed the options to: Spain, Mexico, Ecuador, and Costa Rica. The voters' preferences are shown in the table below. -Refer to Table 22-13. In a pairwise election between Mexico and Spain and then a second election between the winner and Costa Rica, which countries are chosen?

Kim owns a small business in Denver. She travels frequently, meeting with important customers, and attending conferences. Kim hired Matt to work in the Denver office as the day-to-day general manager of the business.

A mother gives her teenage daughter two choices: spend 20 minutes cleaning her room today or spend 25 minutes cleaning her room tomorrow. The same mother gives her same daughter two additional choices: clean out the garage for 20 minutes next Tuesday or 25 minutes next Wednesday. According to economic theory,

Kris and Kelly have been dating for several years. Kris loves Kelly very much and wants to marry her. Which of the following is the best way to signal his love to her?

Table 22-14 Amy, Beth, and Connie are on a hiring committee. They have interviewed 3 candidates identified by their last names and are going to vote on which one is hired. -Refer to Table 22-14. Adams calls and says she's accepted another position. In which case does Campbell win against Brown?

Scenario 22-4 Three members of the DiCarlo family, Vinny, Maria, and Franki, are choosing the entree for a large family reunion. Their options are: spaghetti, ravioli, lasagne, and pizza. Vinny prefers spaghetti over lasagne, lasagne over ravioli, and ravioli over pizza. Maria prefers ravioli over spaghetti, spaghetti over pizza, and pizza over lasagne. Frankie prefers pizza over ravioli, ravioli over lasagne, and lasagne over spaghetti. -Refer to Scenario 22-4. Maria recommends using a vote by majority rule and proposes first choosing between spaghetti and lasagne, then choosing between the winner of the first vote and ravioli, and finally choosing between the winner of the second vote and pizza. If everyone votes according to his or her preferences,

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. When the mayor asks the residents to choose between a stoplight and a 4-way stop, the residents choose a 4-way stop. Then, when the mayor asks them to choose between a 4-way stop and a 2-way stop, they choose a 2-way stop. However, if the mayor firsts asks the residents to choose between a 4-way stop and a 2-way stop, they choose a 2-way stop. Then, when the mayor asks the residents to choose between a 2-way stop and a stoplight, they choose a stoplight. What does this example illustrate?

The Condorcet paradox demonstrates that the result of a majority vote may be affected by

According to one survey 76 percent of Americans said they were not saving enough for retirement. This example of inconsistency over time