Question 1

A motorist choosing a high-deductible plan is an example of:

Accepted Answer

A) screening. 
B) signaling. 
C) statistical discrimination. 
D) building a reputation. 
A) screening. 
B) signaling. 
C) statistical discrimination. 
D) building a reputation.

Question 2

A college requesting applicants to submit their high school transcripts is an example of:

Accepted Answer

A) signaling. 
B) screening. 
C) statistical discrimination. 
D) building a reputation. 
A) signaling. 
B) screening. 
C) statistical discrimination. 
D) building a reputation.

Question 3

The result of employers observing negative signals from job candidates during a job search:

Accepted Answer

A) will likely cause the employer to choose a better candidate than without the signals. 
B) will lead to a hire based on more information than before the signals were given. 
C) will lead to a more efficient outcome. 
D) All of these statements are true. 
A) will likely cause the employer to choose a better candidate than without the signals. 
B) will lead to a hire based on more information than before the signals were given. 
C) will lead to a more efficient outcome. 
D) All of these statements are true.

Question 4

User reviews of products on Amazon are an example of:

Accepted Answer

A) screening. 
B) building a reputation. 
C) statistical discrimination. 
D) None of these statements is true. 
A) screening. 
B) building a reputation. 
C) statistical discrimination. 
D) None of these statements is true.

Question 5

An approach that can be taken by someone directly involved in a transaction to solve the problems caused by information asymmetry is:

Accepted Answer

A) screening. 
B) mandating that information be shared. 
C) proofing. 
D) racial discrimination. 
A) screening. 
B) mandating that information be shared. 
C) proofing. 
D) racial discrimination.

Question 6

Adverse selection arises when:

Accepted Answer

A) the wants of both parties are aligned with one another. 
B) buyers and sellers have different information about the quality of a good or the riskiness of a situation. 
C) buyers and sellers with the same information about the quality of a good or the riskiness of a situation seek each other out. 
D) people behave in a riskier way because they have incomplete information. 
A) the wants of both parties are aligned with one another. 
B) buyers and sellers have different information about the quality of a good or the riskiness of a situation. 
C) buyers and sellers with the same information about the quality of a good or the riskiness of a situation seek each other out. 
D) people behave in a riskier way because they have incomplete information.

Question 7

Moral hazard is a problem that arises:

Accepted Answer

A) before the parties have entered into an agreement. 
B) after the parties have voluntarily entered into an agreement. 
C) either before or after the parties have entered into an agreement. 
D) rarely in any market. 
A) before the parties have entered into an agreement. 
B) after the parties have voluntarily entered into an agreement. 
C) either before or after the parties have entered into an agreement. 
D) rarely in any market.

Question 8

When information asymmetry exists in a market,government:

Accepted Answer

A) always steps in to try to correct it. 
B) never steps in to try to correct it. 
C) sometimes steps in to try to correct it. 
D) only steps in to correct it if it can ensure complete information. 
A) always steps in to try to correct it. 
B) never steps in to try to correct it. 
C) sometimes steps in to try to correct it. 
D) only steps in to correct it if it can ensure complete information.

Question 9

People:

Accepted Answer

A) rarely have access to complete information. 
B) always have access to complete information. 
C) never have access to complete information. 
D) often have access to complete information. 
A) rarely have access to complete information. 
B) always have access to complete information. 
C) never have access to complete information. 
D) often have access to complete information.

Question 10

Signaling is when someone takes action to:

Accepted Answer

A) reveal private information about someone else. 
B) reveal one's own private information. 
C) find out the opportunity cost of acquiring more information. 
D) None of these statements is true. 
A) reveal private information about someone else. 
B) reveal one's own private information. 
C) find out the opportunity cost of acquiring more information. 
D) None of these statements is true.

Question 11

When a college graduate with a degree in art history applies for an office job in a business:

Accepted Answer

A) they are negatively signaling that they are not interested in the job. 
B) they are positively signaling that they are hardworking,intelligent and can accomplish tasks. 
C) they will be screened out immediately due to job-skill mismatch. 
D) an employer will be confused by the signal it sends. 
A) they are negatively signaling that they are not interested in the job. 
B) they are positively signaling that they are hardworking,intelligent and can accomplish tasks. 
C) they will be screened out immediately due to job-skill mismatch. 
D) an employer will be confused by the signal it sends.

Question 12

User reviews of products on store websites are an example of:

Accepted Answer

A) signaling. 
B) building a reputation. 
C) a solution to information asymmetry. 
D) All of these statements are true. 
A) signaling. 
B) building a reputation. 
C) a solution to information asymmetry. 
D) All of these statements are true.

Question 13

When parties to a deal need information:

Accepted Answer

A) they have direct access to all of it in all transactions. 
B) they will not complete the deal without getting complete information. 
C) they sometimes seek it out in ways that are not obvious. 
D) they always make the deal blindly. 
A) they have direct access to all of it in all transactions. 
B) they will not complete the deal without getting complete information. 
C) they sometimes seek it out in ways that are not obvious. 
D) they always make the deal blindly.

Question 14

Moral hazard is:

Accepted Answer

A) the tendency for people to behave in a riskier way or to renege on contracts when they do not face the full consequences of their actions. 
B) when people engage in behavior that is considered highly desirable by the person who bears the cost of the behavior. 
C) when buyers and sellers have different information about the quality of a good or the riskiness of a situation. 
D) when buyers and sellers with the same information about the quality of a good or the riskiness of a situation agree to a somewhat shady deal. 
A) the tendency for people to behave in a riskier way or to renege on contracts when they do not face the full consequences of their actions. 
B) when people engage in behavior that is considered highly desirable by the person who bears the cost of the behavior. 
C) when buyers and sellers have different information about the quality of a good or the riskiness of a situation. 
D) when buyers and sellers with the same information about the quality of a good or the riskiness of a situation agree to a somewhat shady deal.

Question 15

If the cost of acquiring more information outweighs the benefit of having more information about a good,then we can predict:

Accepted Answer

A) the exchange will definitely not take place. 
B) the exchange may take place anyway. 
C) the exchange will not benefit anyone. 
D) the exchange will take place,but will be regretted in the future. 
A) the exchange will definitely not take place. 
B) the exchange may take place anyway. 
C) the exchange will not benefit anyone. 
D) the exchange will take place,but will be regretted in the future.

Question 16

The "lemons" problem is used to explain the concept of:

Accepted Answer

A) complete information. 
B) adverse selection. 
C) moral hazard. 
D) collective bargaining. 
A) complete information. 
B) adverse selection. 
C) moral hazard. 
D) collective bargaining.

Question 17

An employer asking for a list of references from a potential employee is an example of:

Accepted Answer

A) signaling. 
B) screening. 
C) statistical discrimination. 
D) building a reputation. 
A) signaling. 
B) screening. 
C) statistical discrimination. 
D) building a reputation.

Question 18

Information asymmetry is a problem when:

Accepted Answer

A) a buyer and seller have opposing incentives. 
B) a buyer and seller have aligned incentives. 
C) a market is highly efficient. 
D) a market is highly inefficient. 
A) a buyer and seller have opposing incentives. 
B) a buyer and seller have aligned incentives. 
C) a market is highly efficient. 
D) a market is highly inefficient.

Question 19

An employer asking potential job candidates to perform a test is an example of:

Accepted Answer

A) screening. 
B) signaling. 
C) statistical discrimination. 
D) building a reputation. 
A) screening. 
B) signaling. 
C) statistical discrimination. 
D) building a reputation.

Question 20

When a transaction takes place repeatedly,then one way to signal to avoid information asymmetry is:

Accepted Answer

A) building a reputation. 
B) screening. 
C) statistical discrimination. 
D) Any of these could be true. 
A) building a reputation. 
B) screening. 
C) statistical discrimination. 
D) Any of these could be true.

Exam 10: Information

A motorist choosing a high-deductible plan is an example of:

A college requesting applicants to submit their high school transcripts is an example of:

The result of employers observing negative signals from job candidates during a job search:

User reviews of products on Amazon are an example of:

An approach that can be taken by someone directly involved in a transaction to solve the problems caused by information asymmetry is:

Adverse selection arises when:

Moral hazard is a problem that arises:

When information asymmetry exists in a market,government:

People:

Signaling is when someone takes action to:

When a college graduate with a degree in art history applies for an office job in a business:

User reviews of products on store websites are an example of:

When parties to a deal need information:

Moral hazard is:

If the cost of acquiring more information outweighs the benefit of having more information about a good,then we can predict:

The "lemons" problem is used to explain the concept of:

An employer asking for a list of references from a potential employee is an example of:

Information asymmetry is a problem when:

An employer asking potential job candidates to perform a test is an example of:

When a transaction takes place repeatedly,then one way to signal to avoid information asymmetry is:

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