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Exam 22: Frontiers in Microeconomics.

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Question 111

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According to one survey 76 percent of Americans said they were not saving enough for retirement.This example of inconsistency over time

A) is rational behavior.
B) likely occurs because saving requires a sacrifice in the present for a reward in the distant future.
C) likely occurs because Americans don't care about retirement.
D) definitely would not happen if Americans earned a greater return on their investments.

E) All of the above
F) B) and D)

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Question 112

Multiple Choice

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Which of the following statements is correct?

A) Hidden actions and hidden characteristics are both associated with the moral-hazard problem.
B) Hidden actions and hidden characteristics are both associated with the adverse-selection problem.
C) Hidden actions are associated with the moral-hazard problem, whereas hidden characteristics are associated with the adverse-selection problem.
D) Hidden actions are associated with the adverse-selection problem, whereas hidden characteristics are associated with the moral-hazard problem.

E) B) and C)
F) None of the above

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Question 113

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If A is preferred to B and C is preferred to D,then B must be preferred to C to satisfy transitivity.

Table 22-11 The following table shows the preferences of four types of voters over four possible alternatives as well as the percentage of the electorate with the given preferences. -Refer to Table 22-11.Suppose before any voting takes place that alternative W is eliminated as an option.If the voters first choose between alternatives X and Y in a majority vote,with the winner of that vote going against option Z in a majority vote,which alternative would win?

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

In the field of study called political economy,economists make use of insights from the field of psychology.

Experiments show that when real people play the ultimatum game,starting with $100,

Studies of human decision-making have found that people do not give enough weight to a small number of vivid observations.

Table 22-11 The following table shows the preferences of four types of voters over four possible alternatives as well as the percentage of the electorate with the given preferences. -Refer to Table 22-11.In a majority vote between alternatives X and Y,what percentage of the votes would X receive?

The Arrow impossibility theorem shows that

Table 22-13 The fortunate residents of Anytown have a budget surplus. The mayor decided that it is only fair to have the residents vote on what to do with the surplus. The mayor has narrowed the options down to three possible projects: a playground, a library, or a swimming pool. The voters fall into three categories and have preferences as illustrated in the table. -Refer to Table 22-13.If the mayor asks the residents to choose between the playground and the swimming pool using pairwise voting,

Table 22-3 The citizens of Anytown will decide whether to build a new library, a new community center, or a new ice rink. Exactly one of the three choices will prevail, and the choice will be made by way of pairwise voting, with the majority determining the outcome on each vote. The preferences of the voters are summarized in the table below. -Refer to Table 22-3.Which of the following statements is correct?

Scenario 22-1 At issue in a particular city vote is how much to spend, per person, on road repair next year. Among the 10,000 voters, 1,500 prefer to spend $300 per person, but no more; 2,800 prefer to spend $450 per person, but no more; 3,500 prefer to spend $800 per person, but no more; and 2,200 prefer to spend $1500 per person, but no more. -Refer to Scenario 22-1.The median voter is one who prefers to spend

Assume there are nine voters in a certain small town and let x = the preferred number of dollars spent per person per month on garbage collection.For Voters 1,2,and 3,x = $10; for Voter 4,x = $15; for Voter 5,x = $18; and for Voters 6,7,8 and 9,x = $20.The median voter is

The state of Massachusetts requires all citizens to purchase medical insurance or face a monetary penalty when filing their taxes.The penalty is significantly less than the average annual insurance premium.Moreover,the state requires insurance companies to issue policies to anyone who applies,regardless of their health at the time of application.Which of the following examples describes the inherent adverse selection problem?

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

Assume there are nine voters in a certain small town and let x = the preferred number of dollars spent per person per month on garbage collection.For Voters 1,2,and 3,x = $10; for Voter 4,x = $15; for Voter 5,x = $18; and for Voters 6,7,8 and 9,x = $20.Based on the results of the vote,the dollars spent per person per month on garbage collection will be

Table 22-2 Three longtime friends-Jack, Ryan, and Colin-are deciding how they will spend their Sunday afternoon. They all agree that they should do one of three things: go to a movie, go to the zoo, or go to a museum. They also agree that they will have two pairwise votes to determine how to spend their evening, with the majority determining the outcome on each vote. The first, second, and third choices for each person are as indicated in the table below. -Refer to Table 22-2.If (1) the first vote pits "baseball game" against "zoo," and (2) the second vote pits "movie" against the winner of the first vote,then

The Condorcet paradox demonstrates that the result of a majority vote may be affected by

One of the things that employers can do to lessen the moral hazard problem involving their employees is to pay them in advance for their work.