Question 1

Which of the following is a lesson from the Condorcet paradox?

Accepted Answer

A) If voters are choosing a point along a line, then majority rule will pick the most preferred point of the median voter. 
B) Under certain conditions, there is no scheme for aggregating individual preferences. 
C) When there are more than two options, deciding the order in which to pairwise vote can have a powerful influence over the outcome of an election. 
D) Majority voting always indicates what outcome a society really wants. 
A) If voters are choosing a point along a line, then majority rule will pick the most preferred point of the median voter. 
B) Under certain conditions, there is no scheme for aggregating individual preferences. 
C) When there are more than two options, deciding the order in which to pairwise vote can have a powerful influence over the outcome of an election. 
D) Majority voting always indicates what outcome a society really wants. C

Question 2

An example of signaling is a boyfriend giving an expensive, romantic gift to his girlfriend to convey his love for her.

Accepted Answer

A) True 
 B)False  True

Question 3

Signaling is an action taken by an uninformed party to induce an informed party to reveal information.

Accepted Answer

A) True 
 B)False  False

Question 4

An implication of the median voter theorem is that, in a race between Republicans and Democrats,

Accepted Answer

A) if Democrats want to win, they will take an extreme stance on many issues. 
B) Republicans and Democrats go to extremes to differentiate themselves from one another. 
C) if Republicans want to win, they will take a "middle-of-the-road" stance on many issues. 
D) Republicans and Democrats work hard to identify the fringe voters. 
A) if Democrats want to win, they will take an extreme stance on many issues. 
B) Republicans and Democrats go to extremes to differentiate themselves from one another. 
C) if Republicans want to win, they will take a "middle-of-the-road" stance on many issues. 
D) Republicans and Democrats work hard to identify the fringe voters.

Question 5

Economic experiments show that people care more about winning a game than about its intrinsic fairness.

Accepted Answer

A) True 
 B)False

Question 6

The problem that arises in markets in which the seller knows more about the characteristics of the good being sold than the buyer knows is

Accepted Answer

The answer of The problem that arises in markets in...

Question 7

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

Accepted Answer

A) both moral hazard and adverse selection. 
B) neither moral hazard nor adverse selection. 
C) moral hazard, but not adverse selection. 
D) adverse selection, but not moral hazard. 
A) both moral hazard and adverse selection. 
B) neither moral hazard nor adverse selection. 
C) moral hazard, but not adverse selection. 
D) adverse selection, but not moral hazard.

Question 8

In his 1951 book Social Choice and Individual Values, Arrow argues that a perfect voting system satisfies all of the following properties except

Accepted Answer

A) unanimity. 
B) transitivity. 
C) reflexivity. 
D) independence of irrelevant alternatives. 
A) unanimity. 
B) transitivity. 
C) reflexivity. 
D) independence of irrelevant alternatives.

Question 9

The science of economics is a finished jewel, perfect and unchanging.

Accepted Answer

A) True 
 B)False

Question 10

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 11

Studies of human decision making have found that people are reluctant to change their minds.

Accepted Answer

A) True 
 B)False

Question 12

Most economic models incorporate the assumption of rational behavior on the part of economic actors.

Accepted Answer

A) True 
 B)False

Question 13

Students of microeconomic principles often say they are going to study "tonight," because the only way to pass the exam is to study some every night. When "tonight" comes, some students choose to do something else. Come exam day, these students do not do well on their exam. This observation is an example of how people are

Accepted Answer

A) inconsistent over time. 
B) consistent over time. 
C) mainly interested in fairness. 
D) rational. 
A) inconsistent over time. 
B) consistent over time. 
C) mainly interested in fairness. 
D) rational.

Question 14

One way that employers respond to the moral-hazard problem is by monitoring their employees.

Accepted Answer

A) True 
 B)False

Question 15

Scenario 22-3
​
Shana owns a boutique that sells high-end women's clothing and accessories. Katie works part-time at the boutique and frequently is the only employee in this small store. Shana pays Katie a wage that is higher than the market wage for this type of job. When the store is not full of customers, Katie diligently works on displays and cleans to keep the store looking its best. Belinda is a customer in the store who asks Katie's opinion on the quality of some jeans she is considering purchasing. Katie tells her the quality is great even though she's had several other customers return them due to flaws. Magda is another customer who is returning a necklace without volunteering that a gem is missing.
-Refer to Scenario 22-3. Why do you suppose Shana pays Katie a wage higher than the market wage?

Accepted Answer

to avoid a

Question 16

Assume there are two major political parties: the Conservatives and the Liberals. What does the median voter theorem imply about the nature of the platforms (that is, policy stances) of the Conservatives and Liberals?

Accepted Answer

The median voter theorem implies that po

Question 17

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 18

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 19

People with hidden health problems are more likely to buy health insurance than are other people. This is an example of

Accepted Answer

A) moral hazard and makes the cost of health insurance higher than otherwise. 
B) moral hazard and makes the cost of health insurance lower than otherwise. 
C) adverse selection and makes the cost of health insurance higher than otherwise. 
D) adverse selection and makes the cost of health insurance lower than otherwise. 
A) moral hazard and makes the cost of health insurance higher than otherwise. 
B) moral hazard and makes the cost of health insurance lower than otherwise. 
C) adverse selection and makes the cost of health insurance higher than otherwise. 
D) adverse selection and makes the cost of health insurance lower than otherwise.

Question 20

The median voter theorem states that majority-rule political systems will produce policies that are most preferable for the median voter.​

Accepted Answer

A) True 
 B)False

Exam 22: Frontiers in Microeconomics

Which of the following is a lesson from the Condorcet paradox?

An example of signaling is a boyfriend giving an expensive, romantic gift to his girlfriend to convey his love for her.

Signaling is an action taken by an uninformed party to induce an informed party to reveal information.

An implication of the median voter theorem is that, in a race between Republicans and Democrats,

Economic experiments show that people care more about winning a game than about its intrinsic fairness.

The problem that arises in markets in which the seller knows more about the characteristics of the good being sold than the buyer knows is

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

In his 1951 book Social Choice and Individual Values, Arrow argues that a perfect voting system satisfies all of the following properties except

The science of economics is a finished jewel, perfect and unchanging.

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

Studies of human decision making have found that people are reluctant to change their minds.

Most economic models incorporate the assumption of rational behavior on the part of economic actors.

One way that employers respond to the moral-hazard problem is by monitoring their employees.

Assume there are two major political parties: the Conservatives and the Liberals. What does the median voter theorem imply about the nature of the platforms (that is, policy stances) of the Conservatives and Liberals?

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

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

People with hidden health problems are more likely to buy health insurance than are other people. This is an example of

The median voter theorem states that majority-rule political systems will produce policies that are most preferable for the median voter.​

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

Applications: 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

Tools of Finance

Unemployment and Its Natural Rate

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 Tradeoff Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

Filters

The median voter theorem states that majority-rule political systems will produce policies that are most preferable for the median voter.