Question 1

Consumer Reports' reviews of products:

Accepted Answer

A)  reduce an inefficiency in the market. 
B)  allow more transactions that are valuable to buyers and sellers to take place. 
C)  credibly provide more information to market participants. 
D)  All of these statements are true. 
A)  reduce an inefficiency in the market. 
B)  allow more transactions that are valuable to buyers and sellers to take place. 
C)  credibly provide more information to market participants. 
D)  All of these statements are true.

Question 2

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 3

The used car market is:

Accepted Answer

A)  used to describe the "lemons" problem. 
B)  an example of what happens when there is an imbalance of information present in a market. 
C)  subject to the problem of adverse selection. 
D)  All of these statements are true. 
A)  used to describe the "lemons" problem. 
B)  an example of what happens when there is an imbalance of information present in a market. 
C)  subject to the problem of adverse selection. 
D)  All of these statements are true.

Question 4

Statistical discrimination using gender and age:

Accepted Answer

A)  is legal in the insurance market, but not the job market. 
B)  is legal in the job market, but not the insurance market. 
C)  is legal in any market, but using race is not. 
D)  is illegal in any market. 
A)  is legal in the insurance market, but not the job market. 
B)  is legal in the job market, but not the insurance market. 
C)  is legal in any market, but using race is not. 
D)  is illegal in any market.

Question 5

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 6

Drivers with auto insurance being more likely to act carelessly is an example of:

Accepted Answer

A)  adverse selection. 
B)  moral hazard. 
C)  asymmetric selection. 
D)  information optimization. 
A)  adverse selection. 
B)  moral hazard. 
C)  asymmetric selection. 
D)  information optimization.

Question 7

All food bought in the United States has an ingredient list on the packaging.This is an example of:

Accepted Answer

A)  screening. 
B)  signaling. 
C)  requiring the more informed party to reveal missing information. 
D)  building a reputation. 
A)  screening. 
B)  signaling. 
C)  requiring the more informed party to reveal missing information. 
D)  building a reputation.

Question 8

Moral hazard can be avoided by:

Accepted Answer

A)  employers monitoring employee effort. 
B)  removing the asymmetric information. 
C)  employers incentivizing employees to maintain consistent effort. 
D)  All of these statements are true. 
A)  employers monitoring employee effort. 
B)  removing the asymmetric information. 
C)  employers incentivizing employees to maintain consistent effort. 
D)  All of these statements are true.

Question 9

An example of a way employers can minimize moral hazard is to:

Accepted Answer

A)  monitor employees' computer activity. 
B)  offer bonuses for consistent productivity. 
C)  videotape the workplace. 
D)  All of these are ways to minimize moral hazard. 
A)  monitor employees' computer activity. 
B)  offer bonuses for consistent productivity. 
C)  videotape the workplace. 
D)  All of these are ways to minimize moral hazard.

Question 10

In order for education to be effective as a signal of worker productivity it must be

Accepted Answer

A)  easy for everyone to get a college degree. 
B)  costly for less productive workers to imitate. 
C)  that the employee has taken classes in economics. 
D)  none of the above make education an effective signal. 
A)  easy for everyone to get a college degree. 
B)  costly for less productive workers to imitate. 
C)  that the employee has taken classes in economics. 
D)  none of the above make education an effective signal.

Question 11

When a lack of information exists for parties to a deal:

Accepted Answer

A)  it is always worth getting more information before making a decision. 
B)  the cost of acquiring information sometimes is prohibitive and not worth it. 
C)  an exchange will never happen. 
D)  the exchange will always happen anyway, with little chance of maximizing surplus. 
A)  it is always worth getting more information before making a decision. 
B)  the cost of acquiring information sometimes is prohibitive and not worth it. 
C)  an exchange will never happen. 
D)  the exchange will always happen anyway, with little chance of maximizing surplus.

Question 12

The result of effective screening and signaling can be:

Accepted Answer

A)  more transactions take place. 
B)  surplus is increased for buyer and/or seller. 
C)  more information is credibly shared. 
D)  All of these statements are true. 
A)  more transactions take place. 
B)  surplus is increased for buyer and/or seller. 
C)  more information is credibly shared. 
D)  All of these statements are true.

Question 13

Agreeing to take a drug test offered by a potential employer is a method 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 14

Disclosure laws:

Accepted Answer

A)  are an example of how government attempts to assert control over what we eat. 
B)  always help solve information asymmetry, but can cause other problems. 
C)  can result in information overload. 
D)  All of these statements are true. 
A)  are an example of how government attempts to assert control over what we eat. 
B)  always help solve information asymmetry, but can cause other problems. 
C)  can result in information overload. 
D)  All of these statements are true.

Question 15

Job candidates during a job search will seek to provide employers with ______ but avoid providing _____:

Accepted Answer

A)  positive signals; negative signals. 
B)  as much information as possible; private information. 
C)  negative signals; positive signals. 
D)  truthful information; false information. 
A)  positive signals; negative signals. 
B)  as much information as possible; private information. 
C)  negative signals; positive signals. 
D)  truthful information; false information.

Question 16

The key to a successful positive signal is that:

Accepted Answer

A)  it is costly to fake. 
B)  it is hidden information. 
C)  it builds trust between the principal and the agent. 
D)  All of these statements are true. 
A)  it is costly to fake. 
B)  it is hidden information. 
C)  it builds trust between the principal and the agent. 
D)  All of these statements are true.

Question 17

A high school student who voluntarily includes a writing sample with their college application is an example of:

Accepted Answer

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

Question 18

In the principal-agent problem,the agent is:

Accepted Answer

A)  a person who entrusts someone with a task. 
B)  a person who carries out a task on someone else's behalf. 
C)  a person who is in charge of a top-secret mission. 
D)  a person who has the same objectives as the principal. 
A)  a person who entrusts someone with a task. 
B)  a person who carries out a task on someone else's behalf. 
C)  a person who is in charge of a top-secret mission. 
D)  a person who has the same objectives as the principal.

Question 19

The nutritional information now available at many fast food restaurants is an example of:

Accepted Answer

A)  a failed attempt by government to reduce information asymmetry. 
B)  requiring the more informed party to reveal the missing information. 
C)  government regulation to screen out unhealthy food for consumers. 
D)  government requiring the restaurants to signal whether food is healthy or not. 
A)  a failed attempt by government to reduce information asymmetry. 
B)  requiring the more informed party to reveal the missing information. 
C)  government regulation to screen out unhealthy food for consumers. 
D)  government requiring the restaurants to signal whether food is healthy or not.

Question 20

An insurance company offering 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.

Exam 10: Information

Consumer Reports' reviews of products:

When information asymmetry exists in a market,government:

The used car market is:

Statistical discrimination using gender and age:

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

Drivers with auto insurance being more likely to act carelessly is an example of:

All food bought in the United States has an ingredient list on the packaging.This is an example of:

Moral hazard can be avoided by:

An example of a way employers can minimize moral hazard is to:

In order for education to be effective as a signal of worker productivity it must be

When a lack of information exists for parties to a deal:

The result of effective screening and signaling can be:

Agreeing to take a drug test offered by a potential employer is a method of:

Disclosure laws:

Job candidates during a job search will seek to provide employers with ______ but avoid providing _____:

The key to a successful positive signal is that:

A high school student who voluntarily includes a writing sample with their college application is an example of:

In the principal-agent problem,the agent is:

The nutritional information now available at many fast food restaurants is an example of:

An insurance company offering a high-deductible plan is an example of:

Economics and Life

Specialization and Exchange

Markets

Elasticity

Efficiency

Government Intervention Microeconomics

Consumer Behavior

Behavioral Economics: A Closer Look at Decision Making

Game Theory and Strategic Thinking

Time and Uncertainty

The Costs of Production

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

The Factors of Production

International Trade

Externalities

Public Goods and Common Resources

Taxation and the Public Budget

Poverty, Inequality, and Discrimination

Political Choices

Public Policy and Choice Architecture

Filters

Job candidates during a job search will seek to provide employers with __ but avoid providing _: