FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 22: Frontiers of Microeconomics

Show Answer

Share

---

All types

Filters

Study Flashcards

Question 71

Multiple Choice

Review LaterAdd Note

Review Later

Peter was recently hired as a salesman for a national consulting firm. His job involves spending a significant portion of his time out of the office visiting prospects and attending conferences. Which of the following is a strategy the consulting firm may employ to discourage Peter from shirking his responsibilities?

A) Tell Peter that the shareholders want to earn a large profit this year.
B) Pay Peter commissions on what he sells after the work has been completed.
C) Allow Peter to set his own schedule and work from home frequently.
D) Pay Peter a lower wage than he would earn in a similar job at another firm.

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

Correct Answer

verified

Show Answer

Question 72

Short Answer

Review LaterAdd Note

Review Later

The proposal to place a tax on soda is intended to address what insight about human behavior?

Correct Answer

verified

People are...

View Answer

Show Answer

Question 73

True/False

Review LaterAdd Note

In a moral hazard problem, the agent is unable to perfectly monitor the principal's behavior so the principal applies less effort than the agent considers desirable.

Screening occurs when

Bob is planning to sell his home. In preparation for the sale, he paints all of the ceilings in his house to cover up water stains from his leaking roof so that potential buyers will be unaware of this problem. This is an example of

Table 22-6 -Refer to Table 22-6. The table shows the preferences of 100 voters over three possible outcomes: A, B, and C. In pairwise majority voting in which voters choose first between A and B and then choose between the winner of the first vote and C,

Which of the following is an example of signaling?

Table 22-25 Sophie, Huan, and Santiago are lost with no map or GPS available. They come to an intersection at which they can turn left, turn right, or continue going straight. Their preferences are summarized in the table. -Refer to Table 22-25. The travelers decide to conduct pairwise voting with the majority determining the outcome of each vote to decide their next move. If they first choose between going left and going straight, and then choose between the winner of the first vote and going right, which direction will they go?

Table 22-1 Three friends -- Linda, Stephanie, and Jamie -- are deciding where to go together for vacation. They all agree that they should go to one of three places: France, Greece, or Italy. They also agree that they will have two pairwise votes to determine where to go on vacation, 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 22-1. If the first vote pits France against Italy and the second vote pits Greece against the winner of the first vote, then the outcome is as follows:

Majority rule will produce the outcome most preferred by the median voter.

Evidence from experiments in which real people play the ultimatum game supports the idea that people care about fairness as well as about maximization of their personal wealth.

A brand of wine is priced at only $5 per bottle, far below the market price of most high quality wines. Before any reputation exists for the wine, consumers buy very little of this inexpensive wine because they interpret the low price to mean that the wine is of poor quality. The company decides to change the label on the wine to show that it has won awards for quality. This label change is an example of

Table 22-13 A high school Spanish class and their teacher are planning to take a Spring Break trip abroad but they have to decide where to go. They have narrowed the options to: Spain, Mexico, Ecuador, and Costa Rica. The voters' preferences are shown in the table below. -Refer to Table 22-13. In a pairwise election between Mexico and Ecuador and then a second election between the winner and Costa Rica, which countries are chosen?

Scenario 22-5 A wireless telephone service provider offers three service plans to its consumers. -Refer to Scenario 22-5. By offering consumers these choices and allowing them to select the plan that best meets their needs, the wireless service provider is engaging in

Recent developments in political economy

Scenario 22-6 Shana owns a boutique that sells high­end 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 22-6. Suppose Shana is tired of all of the problems with the brand of jeans she carries and decides to carry a different, higher quality brand instead. She is concerned that her customers will not trust the quality of the new brand so she offers a 60 day money-back guarantee. The action taken by Shana is called

Table 22-9 Voter Type -Refer to Table 22-9. The table shows the preferences of four types of voters over four possible outcomes: A, B, C, and D. In addition, the table shows the percentage of voters of each type. Suppose a Borda count election is held in which each voter ranks the four outcomes, giving 1 point to last place, 2 points to second to last, 3 points to the second best, and 4 points to the best. In this case, which outcome would win?

Evidence from experiments in which real people play the ultimatum game supports the idea that people

A community has five voters who are interested in only one issue: the government's spending on local parks. If Andre would like the government to spend $12,000 on parks, Brandon prefers $7,000, Charlene prefers $4,000, Dennis prefers $2,000, and Ernie prefers $0, how much spending would a politician seeking to win the election select when running against one opponent?

Asymmetric information, political economy, and behavioral economics