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Asymmetric Information

Which of the following help explain why firms pay bonuses to workers during particularly profitable years to prevent workers from becoming disgruntled ?

Asymmetric Information, Economics Mcqs /
Which of the following help explain why firms pay bonuses to workers during particularly profitable years to prevent workers from becoming disgruntled ?

A. people are rational maximizers
B. People are reluctant to change their minds
C. People are inconsistent over time
D. People care about fairness

Which of the following help explain why firms pay bonuses to workers during particularly profitable years to prevent workers from becoming disgruntled ? Read More »

Asymmetric Information, Economics Mcqs

Which of the following is not true about how people make decisions ?

Asymmetric Information, Economics Mcqs /
Which of the following is not true about how people make decisions ?

A. people give too much weight to a small number of vivid observations
B. People are sometimes too sure of their own abilities
C. All of these answers are actually true statements about how people make decisions.
D. People are always rational maximizers
E. People are reluctant to change their minds in the face of new information

Which of the following is not true about how people make decisions ? Read More »

Asymmetric Information, Economics Mcqs

Suppose that 40 percent of the voting population wish to spent Rs1,000 for artwork in City Hall, 25 percent wish to spent Rs20,000 and 35 percent wish to spend Rs 22,000 What is the median preferred outcome, the average preferred outcome and the modal preferred outcome ?

Asymmetric Information, Economics Mcqs /
Suppose that 40 percent of the voting population wish to spent Rs1,000 for artwork in City Hall, 25 percent wish to spent Rs20,000 and 35 percent wish to spend Rs 22,000 What is the median preferred outcome, the average preferred outcome and the modal preferred outcome ?

A. Rs20,000; Rs20,000; Rs22,000
B. Rs1,000; Rs14,333; Rs1,000
C. Rs20,000; Rs13,100; Rs1,000
D. Rs1,000; Rs20,000; Rs22,000

Suppose that 40 percent of the voting population wish to spent Rs1,000 for artwork in City Hall, 25 percent wish to spent Rs20,000 and 35 percent wish to spend Rs 22,000 What is the median preferred outcome, the average preferred outcome and the modal preferred outcome ? Read More »

Asymmetric Information, Economics Mcqs

Which of the following best demonstrates the problem of moral hazard ?

Asymmetric Information, Economics Mcqs /
Which of the following best demonstrates the problem of moral hazard ?

A. Josephine doesn’t buy health insurance because it is too expensive, and she is healthy
B. A life insurance company forces Enzo to have a medical examination prior to selling him insurance
C. Enzo drives more recklessly after he buys car insurance
D. Fatima chooses to attend a well-respected college

Which of the following best demonstrates the problem of moral hazard ? Read More »

Asymmetric Information, Economics Mcqs

Which of the following must be true about a signal that is used to reveal private information in order for the signal to be effective ?

Asymmetric Information, Economics Mcqs /
Which of the following must be true about a signal that is used to reveal private information in order for the signal to be effective ?

A. It must be “as seen on TV”
B. It must be free to the signaling party
C. It must be costly to the signaling party but less costly to the party with higher-quality product
D. It must be applied to an inexpensive product

Which of the following must be true about a signal that is used to reveal private information in order for the signal to be effective ? Read More »

Asymmetric Information, Economics Mcqs

Nicole wants to avoid buying a car that is a lemon. She takes a car she would like to buy to her mechanic before she purchases it. This is known as ?

Asymmetric Information, Economics Mcqs /
Nicole wants to avoid buying a car that is a lemon. She takes a car she would like to buy to her mechanic before she purchases it. This is known as ?

A. screening
B. signaling
C. moral hazard
D. adverse selection

Nicole wants to avoid buying a car that is a lemon. She takes a car she would like to buy to her mechanic before she purchases it. This is known as ? Read More »

Asymmetric Information, Economics Mcqs

Jamil’s friend dies of a sudden heart attack. Jamil rushes to his doctor for an expensive physical examination. This response demonstrates that ?

Asymmetric Information, Economics Mcqs /
Jamil’s friend dies of a sudden heart attack. Jamil rushes to his doctor for an expensive physical examination. This response demonstrates that ?

A. People give too much weight to a small number of vivid observations
B. People easily change their minds when confronted with new information
C. People enjoy going to the doctor
D. People tend to plan ahead and follow through on their plans

Jamil’s friend dies of a sudden heart attack. Jamil rushes to his doctor for an expensive physical examination. This response demonstrates that ? Read More »

Asymmetric Information, Economics Mcqs

In the ultimatum game, what split would be rational for both the person proposing the split and the person who must accept or reject the split ?

Asymmetric Information, Economics Mcqs /
In the ultimatum game, what split would be rational for both the person proposing the split and the person who must accept or reject the split ?

A. There is no rational solution
B. 75/25
C. 99/1
D. 1/99
E. 50/50

In the ultimatum game, what split would be rational for both the person proposing the split and the person who must accept or reject the split ? Read More »

Asymmetric Information, Economics Mcqs

Which of the following is true under pairwise majority rule if people vote for the outcome closest to their most preferred outcome ?

Asymmetric Information, Economics Mcqs /
Which of the following is true under pairwise majority rule if people vote for the outcome closest to their most preferred outcome ?

A. The average preferred outcome wins
B. There is no clear winner due to Arrow’s Impossibility Theorem.
C. The outcome preferred by the median voter wins
D. The outcome preferred by the greatest number of voters wins.

Which of the following is true under pairwise majority rule if people vote for the outcome closest to their most preferred outcome ? Read More »

Asymmetric Information, Economics Mcqs