Question 1

Which of the following is a characteristic of a corporation but not of a small family-owned business?

Accepted Answer

A)   The firm buys inputs in markets for the factors of production.
B)   The firm sells output in markets for goods and services.
C)   The firm is guided in its decisions by the objective of profit maximization.
D)   The firm faces a principal-agent problem created by the separation of ownership and control.E) A) and B)
F) A) and C)

Question 2

Scenario 22-3
Three candidates,Frank,Brian,and Wanda,are running for office.There are three voters in the upcoming election: Henry,Diane,and Linda.Henry prefers Brian over Frank and Frank over Wanda.Diane prefers Wanda over Brian and Brian over Frank.Linda prefers Frank over Brian and Brian over Wanda.
-Refer to Scenario 22-3.If the voters were given a choice of Brian versus Wanda first,then the winner was in a second election versus Frank,who would win?

Accepted Answer

A)   Frank
B)   Brian
C)   Wanda
D)   There is not enough information to answer this question.E) B) and D)
F) A) and C)

Question 3

If preferences exhibit the property of transitivity,then

Accepted Answer

A)   the preferences are irrational.
B)   individuals prefer more government involvement in private markets than do people whose preferences are not transitive.
C)   preferences change over time more quickly than when preferences are not transitive.
D)   preferences satisfy one of the properties assumed to be desireable by Kenneth Arrow in Social Choice and Individual Values.E) B) and C)
F) A) and D)

Question 4

An example of an information asymmetry is when a worker knows more than his employer about his work effort.

Accepted Answer

A) True 
 B)False

Question 5

When Republicans and Democrats offer similar platforms in an election campaign,a likely explanation is the

Accepted Answer

A)   Arrow impossibility theorem.
B)   Condorcet paradox.
C)   median voter theorem.
D)   fact that politicians are more interested in the national interest than their own self-interest.E) B) and C)
F) C) and D) C

Question 6

Explain how the presence of asymmetric information in car insurance markets may lead people who are good drivers or even average drivers to choose not to buy car insurance unless the law requires it.

Accepted Answer

Drivers (buyers and potential buyers of ...

Question 7

The Borda count fails to satisfy which of Kenneth Arrow's properties of a "perfect" voting system?

Accepted Answer

A)   no dictator
B)   unanimity
C)   transitivity
D)   independence of irrelevant alternativesE) A) and B)
F) A) and C)

Question 8

Asymmetric information

Accepted Answer

A)   is not an area of current research in economics.
B)   can take the form of a hidden action or a hidden characteristic.
C)   explains Arrow's impossibility theorem.
D)   is uncommon in corporate management.E) A) and B)
F) A) and C)

Question 9

Table 22-6
 
-Refer to Table 22-6.The table shows the preferences of 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 voter type is the median voter?

Accepted Answer

A)   Type 1
B)   Type 2
C)   Type 3
D)   The median voter cannot be determined without knowing the pair of outcomes from which the voters will be choosing.E) None of the above
F) C) and D)

Question 10

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.Based on the information in the table,which of the following statements is true?

Accepted Answer

A)   In a vote between a 2-way stop and a stoplight,stoplight wins because 40% of voters have stoplight as their 1st choice.
B)   In a vote between a 2-way stop and a 4-way stop,the 4-way stop wins getting 80% of the total vote.
C)   In a vote between a 4-way stop and a stoplight,there is a tie because each gets 40% of the vote.
D)   None of the above are true.E) All of the above
F) C) and D)

Question 11

The Condorcet voting paradox shows that outcomes based on dictatorial preferences do not always obey the property of transitivity.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following is not an example of a moral hazard problem?

Accepted Answer

A)   A manager stays late one evening so that her employee can leave early to attend his child's music recital.
B)   A small child takes an extra cookie from the cookie jar when he thinks his mom isn't watching him closely.
C)   An employee plays solitaire on her computer at 4:30 p.m.on a Friday when her boss has left for the day.
D)   A customer whose new eyeglasses come with a "60-day insurance policy in case of breakage" leaves her glasses out where her new puppy can chew on them.E) All of the above
F) None of the above

Question 13

Recent developments in political economy

Accepted Answer

A)   render much of the traditional field of political science obsolete.
B)   render much of the traditional field of economics obsolete.
C)   illustrate the resolute nature of democracy.
D)   point to the fact that government is a less-than-perfect institution.E) B) and D)
F) A) and C)

Question 14

A person who makes decisions that are "merely good enough" is called a(n)

Accepted Answer

A)   optimizer.
B)   rational person.
C)   satisficer.
D)   maxi-minimizer.E) A) and B)
F) A) and C)

Question 15

The buyer runs a risk of being sold a good of low quality when there is

Accepted Answer

A)   a principal-agent problem.
B)   a moral-hazard problem.
C)   a problem involving hidden actions.
D)   a problem involving hidden characteristics.E) A) and B)
F) A) and C)

Question 16

Frequently it is the case that: (1) A worker knows more than his employer about how much effort he puts into his job,and (2) the seller of a used car knows more than the buyer about the car's condition.

Accepted Answer

A)   Neither (1) nor (2) serves as an example of asymmetric information.
B)   Both (1) and (2) serve as examples of asymmetric information.
C)   Neither (1) nor (2) serves as an example of a hidden action.
D)   Both (1) and (2) serve as examples of hidden action.E) A) and D)
F) A) and C)

Question 17

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.E) B) and C)
F) A) and C) D

Question 18

An airline knows that business travelers have more inelastic demand for travel than vacationers.That is,business travelers are often willing to pay more for airline tickets than vacationers.The airline also knows that business travelers do not like to travel over weekends.When customers request airline tickets that do not involve travel over a weekend,the airline determines that a traveler is likely a business traveler and charges a higher price.This is an example of

Accepted Answer

A)   moral hazard.
B)   signaling.
C)   screening.
D)   adverse selection.E) B) and C)
F) A) and C)

Question 19

Normally,we expect voters' preferences to exhibit a property called

Accepted Answer

A)   transitivity.
B)   transversality.
C)   normality.
D)   universality.E) A) and B)
F) A) and C)

Question 20

Under majority rule,the order in which items are voted on is

Accepted Answer

A)   unimportant,and this is a lesson of the Condorcet paradox.
B)   unimportant,and this is a lesson of Arrow's impossibility theorem.
C)   important,and this is a lesson of the Condorcet paradox.
D)   important,and this is a lesson of Arrow's impossibility theorem.E) A) and B)
F) All of the above C

Exam 22: Frontiers of Microeconomics

Which of the following is a characteristic of a corporation but not of a small family-owned business?

Correct Answer
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Correct Answer
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If preferences exhibit the property of transitivity,then

Correct Answer
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An example of an information asymmetry is when a worker knows more than his employer about his work effort.

Correct Answer
verified

When Republicans and Democrats offer similar platforms in an election campaign,a likely explanation is the

Correct Answer
verified
C

Explain how the presence of asymmetric information in car insurance markets may lead people who are good drivers or even average drivers to choose not to buy car insurance unless the law requires it.

Correct Answer
verified
Drivers (buyers and potential buyers of ...
View Answer

The Borda count fails to satisfy which of Kenneth Arrow's properties of a "perfect" voting system?

Correct Answer
verified

Asymmetric information

Correct Answer
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Table 22-6 -Refer to Table 22-6.The table shows the preferences of 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 voter type is the median voter?

Correct Answer
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Correct Answer
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The Condorcet voting paradox shows that outcomes based on dictatorial preferences do not always obey the property of transitivity.

Correct Answer
verified

Which of the following is not an example of a moral hazard problem?

Correct Answer
verified

Recent developments in political economy

Correct Answer
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A person who makes decisions that are "merely good enough" is called a(n)

Correct Answer
verified

The buyer runs a risk of being sold a good of low quality when there is

Correct Answer
verified

Frequently it is the case that: (1) A worker knows more than his employer about how much effort he puts into his job,and (2) the seller of a used car knows more than the buyer about the car's condition.

Correct Answer
verified

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

Correct Answer
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D

Correct Answer
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Normally,we expect voters' preferences to exhibit a property called

Correct Answer
verified

Under majority rule,the order in which items are voted on is

Correct Answer
verified
C

Exam 22: Frontiers of Microeconomics

Which of the following is a characteristic of a corporation but not of a small family-owned business?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

If preferences exhibit the property of transitivity,then

Correct AnswerverifiedShow Answer

An example of an information asymmetry is when a worker knows more than his employer about his work effort.

Correct AnswerverifiedShow Answer

When Republicans and Democrats offer similar platforms in an election campaign,a likely explanation is the

Correct AnswerverifiedC

Explain how the presence of asymmetric information in car insurance markets may lead people who are good drivers or even average drivers to choose not to buy car insurance unless the law requires it.

Correct AnswerverifiedDrivers (buyers and potential buyers of ...View AnswerShow Answer

The Borda count fails to satisfy which of Kenneth Arrow's properties of a "perfect" voting system?

Correct AnswerverifiedShow Answer

Asymmetric information

Correct AnswerverifiedShow Answer

Table 22-6 -Refer to Table 22-6.The table shows the preferences of 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 voter type is the median voter?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The Condorcet voting paradox shows that outcomes based on dictatorial preferences do not always obey the property of transitivity.

Correct AnswerverifiedShow Answer

Which of the following is not an example of a moral hazard problem?

Correct AnswerverifiedShow Answer

Recent developments in political economy

Correct AnswerverifiedShow Answer

A person who makes decisions that are "merely good enough" is called a(n)

Correct AnswerverifiedShow Answer

The buyer runs a risk of being sold a good of low quality when there is

Correct AnswerverifiedShow Answer

Frequently it is the case that: (1) A worker knows more than his employer about how much effort he puts into his job,and (2) the seller of a used car knows more than the buyer about the car's condition.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedD

Correct AnswerverifiedShow Answer

Normally,we expect voters' preferences to exhibit a property called

Correct AnswerverifiedShow Answer

Under majority rule,the order in which items are voted on is

Correct AnswerverifiedC

Correct Answer
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Correct Answer
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C

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Drivers (buyers and potential buyers of ...
View Answer

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D

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C