Question 1

Table 22-7
The town of Franklin is facing a severe budget shortage. The town administrator has proposed four options to balance the budget: increase property taxes (taxes), cut the school arts budget (arts), turn off half of the streetlights in the town (streetlights), reduce police patrols (police). Exactly one of the four 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.
 $\quad $$\quad $$\quad $$\quad $$\quad $$\quad $$\quad $$\quad $$\quad $$\quad $$\quad $$\quad $$\quad $$\quad $$\quad $$\text { Voter Type }$
$\begin{array} { | l | l | l | l | l | } 
\hline & \text { Type A } & \text { Type B } & \text { Type C } & \text { Type D } \
\hline \text { \% of Electorate } & 14 & 40 & 28 & 18 \
\hline \text { First choice } & \text { taxes } & \text { streetlights } & \text { arts } & \text { police } \
\hline \text { Second choice } & \text { police } & \text { arts } & \text { taxes } & \text { arts } \
\hline \text { Third choice } & \text { streetlights } & \text { taxes } & \text { police } & \text { streetlights } \
\hline \text { Fourth choice } & \text { arts } & \text { police } & \text { streetlights } & \text { taxes } \
\hline
\end{array}$
-Refer to Table 22-7. If a Borda count is used, which option will win?

Accepted Answer

The answer of Table 22-7
The town of Franklin is facing...

Question 2

Scenario 22-3
​
Shana owns a boutique that sells high-end 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 22-3. Why do you suppose Shana pays Katie a wage higher than the market wage?

Accepted Answer

The answer of Scenario 22-3
​
Shana owns a boutique that sells...

Question 3

The failure of majority rule to produce transitive preferences for society is called the

Accepted Answer

The answer of The failure of majority rule to produce...

Question 4

If A is preferred to B and B is preferred to C, then we would expect A to be preferred to C. This property is called

Accepted Answer

The answer of If A is preferred to B and...

Question 5

People with hidden health problems are more likely to buy health insurance than other people. As a result, people in average health may observe the high prices of insurance and decide not to buy it. This is an example of

Accepted Answer

The answer of People with hidden health problems are more...

Question 6

Table 22-7
The town of Franklin is facing a severe budget shortage. The town administrator has proposed four options to balance the budget: increase property taxes (taxes), cut the school arts budget (arts), turn off half of the streetlights in the town (streetlights), reduce police patrols (police). Exactly one of the four 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.
 $\quad $$\quad $$\quad $$\quad $$\quad $$\quad $$\quad $$\quad $$\quad $$\quad $$\quad $$\quad $$\quad $$\quad $$\quad $$\text { Voter Type }$
$\begin{array} { | l | l | l | l | l | } 
\hline & \text { Type A } & \text { Type B } & \text { Type C } & \text { Type D } \
\hline \text { \% of Electorate } & 14 & 40 & 28 & 18 \
\hline \text { First choice } & \text { taxes } & \text { streetlights } & \text { arts } & \text { police } \
\hline \text { Second choice } & \text { police } & \text { arts } & \text { taxes } & \text { arts } \
\hline \text { Third choice } & \text { streetlights } & \text { taxes } & \text { police } & \text { streetlights } \
\hline \text { Fourth choice } & \text { arts } & \text { police } & \text { streetlights } & \text { taxes } \
\hline
\end{array}$
-Refer to Table 22-7. If the town administrator asks the people to first choose between cutting the arts program and turning off half of the streetlights, and then choose between the winner of the first election and reducing police patrols, and then choose between the winner of the second election and increasing taxes, which option will win each vote?

Accepted Answer

The answer of Table 22-7
The town of Franklin is facing...

Question 7

Scenario 22-3
​
Shana owns a boutique that sells high-end 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 22-3. What is the name for the problem Katie creates by lying about the quality of the jeans?

Accepted Answer

The answer of Scenario 22-3
​
Shana owns a boutique that sells...

Question 8

Scenario 22-3
​
Shana owns a boutique that sells high-end 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 22-3. 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

Accepted Answer

The answer of Scenario 22-3
​
Shana owns a boutique that sells...

Question 9

An action taken by an informed party to reveal private information to an uninformed party is called

Accepted Answer

The answer of An action taken by an informed party...

Question 10

Table 22-6
A wireless telephone service provider offers three service plans to its consumers.
 $$\begin{array} { | l | l | l | l | l | } 
\hline & \text { Peak Minutes } & \text { Messaging } & \text { Data Usage } & \text { Monthly Fee } \
\hline \text { Plan A } & 450 & 200 & 2 \mathrm {~GB} / \text { month } & \$ 69.99 \
\hline \text { Plan B } & 900 & 1000 & 5 \mathrm {~GB} / \text { month } & \$ 119.99 \
\hline \text { Plan C } & \text { Unlimited } & \text { Unlimited } & \text { Unlimited } & \$ 149.99 \
\hline
\end{array}$$
-Refer to Table 22-6. By offering consumers these choices and allowing them to select the plan that best meets their needs, the wireless service provider is engaging in

Accepted Answer

The answer of Table 22-6
A wireless telephone service provider offers...

Question 11

Maria and Jose installed a "nanny-camera" in their home so that they can view how the nanny is interacting with their children while they are at work. What type of problem are they trying to combat?

Accepted Answer

The answer of Maria and Jose installed a "nanny-camera" in...

Question 12

Scenario 22-3
​
Shana owns a boutique that sells high-end 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 22-3. Which of the ladies, if any, is committing a moral hazard?

Accepted Answer

The answer of Scenario 22-3
​
Shana owns a boutique that sells...

Question 13

A travel agency offers a money-back guarantee for vacationers taking their first cruise in case they do not enjoy the experience. This guarantee is an example of

Accepted Answer

The answer of A travel agency offers a money-back guarantee...

Question 14

The problem that arises in markets in which the seller knows more about the characteristics of the good being sold than the buyer knows is

Accepted Answer

The answer of The problem that arises in markets in...

Question 15

Table 22-8
​
The citizens of Mayville are having a severe budget shortage and are faced with eliminating athletics from the town high school. The town administrator has determined that the town can afford to maintain one sport. 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 22-8. If the town administrator asks voters to choose first between hockey and basketball and then between the winner of the first vote and football, which sport will win the final vote?

Accepted Answer

The answer of Table 22-8
​
The citizens of Mayville are having...

Question 16

Brandon is considering buying a used car but he first downloads a report from the internet that shows the history of accidents and major repairs conducted on the car. This action is called

Accepted Answer

The answer of Brandon is considering buying a used car...

Question 17

Scenario 22-3
​
Shana owns a boutique that sells high-end 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 22-3. What is the term for the type of wage Shana pays Katie?

Accepted Answer

The answer of Scenario 22-3
​
Shana owns a boutique that sells...

Question 18

Table 22-8
​
The citizens of Mayville are having a severe budget shortage and are faced with eliminating athletics from the town high school. The town administrator has determined that the town can afford to maintain one sport. 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 22-8. If the town administrator asks voters to choose first between basketball and football and then between the winner of the first vote and hockey, which sport will win the final vote?

Accepted Answer

The answer of Table 22-8
​
The citizens of Mayville are having...

Question 19

State one reason why government intervention may not be a good solution to an asymmetric information problem.

Accepted Answer

The answer of State one reason why government intervention may...

Question 20

Pete owns a small store. He has noticed that when he is not at the store monitoring his employees, his revenue goes down. What are two changes Pete could make to wages he pays his employees to correct this problem?

Accepted Answer

The answer of Pete owns a small store. He has...

Quiz 22: Frontiers in Microeconomics

The failure of majority rule to produce transitive preferences for society is called the

If A is preferred to B and B is preferred to C, then we would expect A to be preferred to C. This property is called

People with hidden health problems are more likely to buy health insurance than other people. As a result, people in average health may observe the high prices of insurance and decide not to buy it. This is an example of

An action taken by an informed party to reveal private information to an uninformed party is called

Maria and Jose installed a "nanny-camera" in their home so that they can view how the nanny is interacting with their children while they are at work. What type of problem are they trying to combat?

A travel agency offers a money-back guarantee for vacationers taking their first cruise in case they do not enjoy the experience. This guarantee is an example of

The problem that arises in markets in which the seller knows more about the characteristics of the good being sold than the buyer knows is

Brandon is considering buying a used car but he first downloads a report from the internet that shows the history of accidents and major repairs conducted on the car. This action is called

State one reason why government intervention may not be a good solution to an asymmetric information problem.

Pete owns a small store. He has noticed that when he is not at the store monitoring his employees, his revenue goes down. What are two changes Pete could make to wages he pays his employees to correct this problem?