Question 1

The temptation of imperfectly-monitored workers to shirk their responsibilities is

Accepted Answer

A)  an example of the moral hazard problem. 
B)  an example of the adverse selection problem. 
C)  an example of screening. 
D)  an example of signaling. 
A)  an example of the moral hazard problem. 
B)  an example of the adverse selection problem. 
C)  an example of screening. 
D)  an example of signaling.

Question 2

Table 22-11
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 22-11. Which pairwise voting scheme would result in outcome D?

Accepted Answer

A)  First, choose between A and B. Second, voters choose between the winner of the first vote and C. Third, voters choose between the winner of the second vote and D. 
B)  First, choose between B and D. Second, voters choose between the winner of the first vote and C. Third, voters choose between the winner of the second vote and A. 
C)  First, choose between C and D. Second, voters choose between the winner of the first vote and A. Third, voters choose between the winner of the second vote and B. 
D)  First, choose between C and D. Second, voters choose between the winner of the first vote and B. Third, voters choose between the winner of the second vote and A. 
A)  First, choose between A and B. Second, voters choose between the winner of the first vote and C. Third, voters choose between the winner of the second vote and D. 
B)  First, choose between B and D. Second, voters choose between the winner of the first vote and C. Third, voters choose between the winner of the second vote and A. 
C)  First, choose between C and D. Second, voters choose between the winner of the first vote and A. Third, voters choose between the winner of the second vote and B. 
D)  First, choose between C and D. Second, voters choose between the winner of the first vote and B. Third, voters choose between the winner of the second vote and A.

Question 3

In the case of a moral-hazard problem, which of the following is not a way for the principal to encourage the agent to act more responsibly? The principal could

Accepted Answer

A)  better monitor the agent. 
B)  pay the agent above-equilibrium wages. 
C)  delay payment to the agent. 
D)  stop paying bonuses. 
A)  better monitor the agent. 
B)  pay the agent above-equilibrium wages. 
C)  delay payment to the agent. 
D)  stop paying bonuses.

Question 4

Frank is given the choice between pizza and hotdogs and chooses pizza. Then, before serving him, his host tells Franks he could have a hamburger. Frank says he wants a hot dog. Which of the properties of Arrow's impossibility theorem does Frank violate?

Accepted Answer

Independen

Question 5

Scenario 22-3
At issue in a particular city vote is how much to spend, per person, on road repair next year. Among the 10,000 voters, 2,900 prefer to spend $500 per person, but no more; 2,200 prefer to spend $600 per person, but no more; 1,900 prefer to spend $800 per person, but no more; 1,600 prefer to spend $1,200 but no more, and 1,400 prefer to spend $1,400 per person, but no more.
-Refer to Scenario 22-3. The median voter is one who prefers to spend

Accepted Answer

A)  $500. 
B)  $600. 
C)  $800. 
D)  None of the above are correct. 
A)  $500. 
B)  $600. 
C)  $800. 
D)  None of the above are correct.

Question 6

The results of the ultimatum game illustrate the fact that

Accepted Answer

A)  people's behavior is often driven by an innate sense of fairness. 
B)  homo economicus is a good description of people's behavior. 
C)  self-interest brings out the most efficient economic outcome. 
D)  Both b and c are correct. 
A)  people's behavior is often driven by an innate sense of fairness. 
B)  homo economicus is a good description of people's behavior. 
C)  self-interest brings out the most efficient economic outcome. 
D)  Both b and c are correct.

Question 7

The Condorcet paradox shows that

Accepted Answer

A)  allocations of resources based on majority rule are always inefficient. 
B)  problems in counting votes can negate legitimate democratic outcomes. 
C)  the order on which things are voted can affect the result. 
D)  transitive preferences are inconsistent with rationality. 
A)  allocations of resources based on majority rule are always inefficient. 
B)  problems in counting votes can negate legitimate democratic outcomes. 
C)  the order on which things are voted can affect the result. 
D)  transitive preferences are inconsistent with rationality.

Question 8

Herbert Simon, one of the first social scientists to combine the study of economics and psychology, suggested that humans should be viewed as

Accepted Answer

A)  rational maximizers. 
B)  satisficers. 
C)  independent thinkers. 
D)  signalers. 
A)  rational maximizers. 
B)  satisficers. 
C)  independent thinkers. 
D)  signalers.

Question 9

Arrow's impossibility theorem shows that it is impossible to find a better voting system than pairwise majority voting.

Accepted Answer

A) True 
 B)False

Question 10

The proposal to place a tax on soda is intended to address what insight about human behavior?

Accepted Answer

People are

Question 11

Informational asymmetry may apply to a hidden action or hidden characteristic where the informed party may be reluctant to reveal relevant information.

Accepted Answer

A) True 
 B)False

Question 12

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.

Question 13

Which of the following is not an example of a principal trying to solve the moral-hazard problem? The principal

Accepted Answer

A)  calls the agent's references. 
B)  installs hidden cameras to monitor the agent's behavior. 
C)  pays the agent efficiency wages. 
D)  pays the agent a year-end bonus. 
A)  calls the agent's references. 
B)  installs hidden cameras to monitor the agent's behavior. 
C)  pays the agent efficiency wages. 
D)  pays the agent a year-end bonus.

Question 14

In corporations, which of the following are agents but not principals?

Accepted Answer

A)  shareholders 
B)  the board of directors 
C)  managers 
D)  workers 
A)  shareholders 
B)  the board of directors 
C)  managers 
D)  workers

Question 15

Which of the following sets of preferences can not satisfy the property of transitivity?

Accepted Answer

A)  Plan A is preferred to plan D. Plan D is preferred to plan B. Plan C is preferred to plan B. 
B)  Plan A is preferred to plan B. Plan B is preferred to plan C. Plan A is preferred to plan C. 
C)  Plan C is preferred to plan A. Plan B is preferred to plan A. Plan C is preferred to plan B. 
D)  Plan D is preferred to plan C. Plan C is preferred to plan B. Plan B is preferred to plan D. 
A)  Plan A is preferred to plan D. Plan D is preferred to plan B. Plan C is preferred to plan B. 
B)  Plan A is preferred to plan B. Plan B is preferred to plan C. Plan A is preferred to plan C. 
C)  Plan C is preferred to plan A. Plan B is preferred to plan A. Plan C is preferred to plan B. 
D)  Plan D is preferred to plan C. Plan C is preferred to plan B. Plan B is preferred to plan D.

Question 16

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

Accepted Answer

A)  transitivity. 
B)  pairwise perfection. 
C)  independence of irrelevant alternatives. 
D)  irrelevance of social choices. 
A)  transitivity. 
B)  pairwise perfection. 
C)  independence of irrelevant alternatives. 
D)  irrelevance of social choices.

Question 17

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 18

When each voter has a most-preferred outcome for the expenditure on a particular government program, majority rule will produce the outcome

Accepted Answer

A)  preferred by the mean (average) voter. 
B)  preferred by the median voter. 
C)  that causes the political party in power to increase its power. 
D)  defined by Arrow's Impossibility Theorem. 
A)  preferred by the mean (average) voter. 
B)  preferred by the median voter. 
C)  that causes the political party in power to increase its power. 
D)  defined by Arrow's Impossibility Theorem.

Question 19

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 20

Borda count is a voting method often used in polls that rank sports teams.

Accepted Answer

A) True 
 B)False

Exam 22: Frontiers of Microeconomics

The temptation of imperfectly-monitored workers to shirk their responsibilities is

Table 22-11 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 22-11. Which pairwise voting scheme would result in outcome D?

In the case of a moral-hazard problem, which of the following is not a way for the principal to encourage the agent to act more responsibly? The principal could

Frank is given the choice between pizza and hotdogs and chooses pizza. Then, before serving him, his host tells Franks he could have a hamburger. Frank says he wants a hot dog. Which of the properties of Arrow's impossibility theorem does Frank violate?

The results of the ultimatum game illustrate the fact that

The Condorcet paradox shows that

Herbert Simon, one of the first social scientists to combine the study of economics and psychology, suggested that humans should be viewed as

Arrow's impossibility theorem shows that it is impossible to find a better voting system than pairwise majority voting.

The proposal to place a tax on soda is intended to address what insight about human behavior?

Informational asymmetry may apply to a hidden action or hidden characteristic where the informed party may be reluctant to reveal relevant information.

Which of the following is not an example of a principal trying to solve the moral-hazard problem? The principal

In corporations, which of the following are agents but not principals?

Which of the following sets of preferences can not satisfy the property of transitivity?

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

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

When each voter has a most-preferred outcome for the expenditure on a particular government program, majority rule will produce the outcome

Behavioral economics

Borda count is a voting method often used in polls that rank sports teams.

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

Six Debates Over Macroeconomic Policy

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