Question 1

main advantage of piece rate pay is:

Accepted Answer

A) decreased labor costs. 
B) increased quality. 
C) increased productivity. 
D) easy implementation. 
A) decreased labor costs. 
B) increased quality. 
C) increased productivity. 
D) easy implementation.

Question 2

When factors that an agent doesn't control influencerewards, then factors that an agent does controlbecome more important determinants of rewards.

Accepted Answer

A) True 
 B)False

Question 3

Investing in the U.S. stock market offers ________ odds thangambling in Vegas or with a local bookie.

Accepted Answer

A) worse 
B) better 
C) the same 
D) impossible 
A) worse 
B) better 
C) the same 
D) impossible

Question 4

The consumption bundle that maximizes utility for a consumeris the bundle that:

Accepted Answer

A) equates the slope of the budget constraint with the slope of the indifference curve. 
B) maximizes marginal utility across all goods. 
C) minimizes the costs of production. 
D) maximizes the marginal rate of substitution. 
A) equates the slope of the budget constraint with the slope of the indifference curve. 
B) maximizes marginal utility across all goods. 
C) minimizes the costs of production. 
D) maximizes the marginal rate of substitution.

Question 5

Suppose 1,000 experts flip a coin once each year and half saythe market will go up, while the other half say the market willgo down. After six years how many experts would have beencorrect every year?

Accepted Answer

A) 15 
B) 62 
C) 8 
D) 31 
A) 15 
B) 62 
C) 8 
D) 31

Question 6

a college professor implements a grading scale basedon tournament theory:

Accepted Answer

A) students' grades cannot fall below a certain point. 
B) students' grades will depend on how they perform relative to others in the class. 
C) an absolute grading scale is used. 
D) studying extra will not improve your overall grade. 
A) students' grades cannot fall below a certain point. 
B) students' grades will depend on how they perform relative to others in the class. 
C) an absolute grading scale is used. 
D) studying extra will not improve your overall grade.

Question 7

performance pay is becoming more common in aneconomy:

Accepted Answer

A) wage rates would increase more than productivity in the economy. 
B) the number of unemployed workers in the economy would also increase. 
C) the inequality of earnings in the economy would also increase. 
D) All of the answers are correct. 
A) wage rates would increase more than productivity in the economy. 
B) the number of unemployed workers in the economy would also increase. 
C) the inequality of earnings in the economy would also increase. 
D) All of the answers are correct.

Question 8

Which of the following is an example of tournamentpay?

Accepted Answer

A) giving a bonus to the sales agent with the highest sales 
B) giving a bonus to sales agents based on the gross amount of their sales 
C) giving a bonus to the sales agent with the most hours of working 
D) giving a bonus to sales agents based on the hours of overtime work 
A) giving a bonus to the sales agent with the highest sales 
B) giving a bonus to sales agents based on the gross amount of their sales 
C) giving a bonus to the sales agent with the most hours of working 
D) giving a bonus to sales agents based on the hours of overtime work

Question 9

The benefits of stock markets for the economy include:
I. serving as an intermediary between savers and investors
II.revealing information about firm performance
III. increasing the efficiency of resource allocation among firms.

Accepted Answer

A) I and II only 
B) I and III only 
C) II and III only 
D) I, II, and III 
A) I and II only 
B) I and III only 
C) II and III only 
D) I, II, and III

Question 10

The utility maximizing consumption bundle for a consumer isthe bundle that maximizes marginal utility across all goods.

Accepted Answer

A) True 
 B)False

Question 11

High returns reward savers for bearing high risks.

Accepted Answer

A) True 
 B)False

Question 12

The fact that the majority of stock mutual funds cannotoutperform the stock market averages is consistent with:

Accepted Answer

A) the no free lunch principle. 
B) the risk-return trade-off principle. 
C) the efficient markets hypothesis. 
D) the active trading hypothesis. 
A) the no free lunch principle. 
B) the risk-return trade-off principle. 
C) the efficient markets hypothesis. 
D) the active trading hypothesis.

Question 13

Cheap cars are sometimes lemons. The lesson here isthat:

Accepted Answer

A) used car dealers must never be trusted. 
B) incentives must be tied to effort. 
C) what you pay for is not always what you want.(True Answer )Correct 
D) money is not everything. 
A) used car dealers must never be trusted. 
B) incentives must be tied to effort. 
C) what you pay for is not always what you want.(True Answer )Correct 
D) money is not everything.

Question 14

Ability risk can be described as the risk that:

Accepted Answer

A) external factors such as customer preferences, the economy, or product quality will affect sales. 
B) some members of a sales force will have a higher ability than others. 
C) agents may appear to be high ability when they are actually low ability. 
D) tournament pay may hide the true ability of some agents. 
A) external factors such as customer preferences, the economy, or product quality will affect sales. 
B) some members of a sales force will have a higher ability than others. 
C) agents may appear to be high ability when they are actually low ability. 
D) tournament pay may hide the true ability of some agents.

Question 15

order to encourage students who are concerned abouttheir GPAs to take harder classes, professors of theseclasses should:

Accepted Answer

A) grade on a curve because it increases students' incentive to study even when the material may be
Hard. 
B) grade on a curve because it increases students' incentive to study even when some students in the class
May be smarter than others. 
C) not grade on a curve because grading on a curve will only serve to reduce students' incentive to study,
Particularly if the material is hard. 
D) not grade on a curve because grading on a curve will only serve to attract lower-level students who are less
Likely to study. 
A) grade on a curve because it increases students' incentive to study even when the material may be
Hard. 
B) grade on a curve because it increases students' incentive to study even when some students in the class
May be smarter than others. 
C) not grade on a curve because grading on a curve will only serve to reduce students' incentive to study,
Particularly if the material is hard. 
D) not grade on a curve because grading on a curve will only serve to attract lower-level students who are less
Likely to study.

Question 16

Accepted Answer

A) A, B, C, D 
B) C, B, A, D 
C) B, A, D, C 
D) C, D, A, B 
A) A, B, C, D 
B) C, B, A, D 
C) B, A, D, C 
D) C, D, A, B

Question 17

According to the evidence, very few mutual fund managers canbeat the market averages.

Accepted Answer

A) True 
 B)False

Question 18

Consider the two statements:
I. The closer "what you pay for" is to "what you want,"then the more you can rely on strong incentives
II.If you can't bridge the gap between "what you payfor" and "what you want" then strong incentive schemescan be better than weak incentive schemes.

Accepted Answer

A) I is true; II is false 
B) I is false; II is true 
C) I and II are both true. 
D) I and II are both false. 
A) I is true; II is false 
B) I is false; II is true 
C) I and II are both true. 
D) I and II are both false.

Question 19

is better for a ________ teacher to grade on a curvethan a ________ teacher.

Accepted Answer

A) good; bad 
B) bad; good 
C) English; calculus 
D) calculus; English 
A) good; bad 
B) bad; good 
C) English; calculus 
D) calculus; English

Question 20

According to the text, how many American workerscurrently own stock in the companies they work for?

Accepted Answer

A) about 10 million 
B) about 20 million 
C) about 50 million 
D) No one knows. 
A) about 10 million 
B) about 20 million 
C) about 50 million 
D) No one knows.

main advantage of piece rate pay is:

When factors that an agent doesn't control influencerewards, then factors that an agent does controlbecome more important determinants of rewards.

Investing in the U.S. stock market offers ________ odds thangambling in Vegas or with a local bookie.

The consumption bundle that maximizes utility for a consumeris the bundle that:

Suppose 1,000 experts flip a coin once each year and half saythe market will go up, while the other half say the market willgo down. After six years how many experts would have beencorrect every year?

a college professor implements a grading scale basedon tournament theory:

performance pay is becoming more common in aneconomy:

Which of the following is an example of tournamentpay?

The benefits of stock markets for the economy include: I. serving as an intermediary between savers and investors II.revealing information about firm performance III. increasing the efficiency of resource allocation among firms.

The utility maximizing consumption bundle for a consumer isthe bundle that maximizes marginal utility across all goods.

High returns reward savers for bearing high risks.

The fact that the majority of stock mutual funds cannotoutperform the stock market averages is consistent with:

Cheap cars are sometimes lemons. The lesson here isthat:

Ability risk can be described as the risk that:

order to encourage students who are concerned abouttheir GPAs to take harder classes, professors of theseclasses should:

According to the evidence, very few mutual fund managers canbeat the market averages.

Consider the two statements: I. The closer "what you pay for" is to "what you want,"then the more you can rely on strong incentives II.If you can't bridge the gap between "what you payfor" and "what you want" then strong incentive schemescan be better than weak incentive schemes.

is better for a teacher to grade on a curvethan a teacher.

According to the text, how many American workerscurrently own stock in the companies they work for?

Welcome to Economics

Choice in a World of Scarcity

Demand and Supply

Labor and Financial Markets

Elasticity

Consumer Choices

Production, Costs, and Industry Structure

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Monopoly and Antitrust Policy

Environmental Protection and Negative Externalities

Positive Externalities and Public Goods

Labor Markets and Income

Poverty and Economic Inequality

Information, Risk, and Insurance

Financial Markets

Public Economy

International Trade

Globalization and Protectionism

Filters

Exam 21: Consumer Utility and Optimization

main advantage of piece rate pay is:

When factors that an agent doesn't control influencerewards, then factors that an agent does controlbecome more important determinants of rewards.

Investing in the U.S. stock market offers ________ odds thangambling in Vegas or with a local bookie.

The consumption bundle that maximizes utility for a consumeris the bundle that:

Suppose 1,000 experts flip a coin once each year and half saythe market will go up, while the other half say the market willgo down. After six years how many experts would have beencorrect every year?

a college professor implements a grading scale basedon tournament theory:

performance pay is becoming more common in aneconomy:

Which of the following is an example of tournamentpay?

The benefits of stock markets for the economy include: I. serving as an intermediary between savers and investors II.revealing information about firm performance III. increasing the efficiency of resource allocation among firms.

The utility maximizing consumption bundle for a consumer isthe bundle that maximizes marginal utility across all goods.

High returns reward savers for bearing high risks.

The fact that the majority of stock mutual funds cannotoutperform the stock market averages is consistent with:

Cheap cars are sometimes lemons. The lesson here isthat:

Ability risk can be described as the risk that:

order to encourage students who are concerned abouttheir GPAs to take harder classes, professors of theseclasses should:

According to the evidence, very few mutual fund managers canbeat the market averages.

Consider the two statements: I. The closer "what you pay for" is to "what you want,"then the more you can rely on strong incentives II.If you can't bridge the gap between "what you payfor" and "what you want" then strong incentive schemescan be better than weak incentive schemes.

is better for a ________ teacher to grade on a curvethan a ________ teacher.

According to the text, how many American workerscurrently own stock in the companies they work for?

Welcome to Economics

Choice in a World of Scarcity

Demand and Supply

Labor and Financial Markets

Elasticity

Consumer Choices

Production, Costs, and Industry Structure

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Monopoly and Antitrust Policy

Environmental Protection and Negative Externalities

Positive Externalities and Public Goods

Labor Markets and Income

Poverty and Economic Inequality

Information, Risk, and Insurance

Financial Markets

Public Economy

International Trade

Globalization and Protectionism

Filters

is better for a teacher to grade on a curvethan a teacher.