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Principles of Microeconomics

N. GREGORY MANKIW

Chapter 22

Frontiers of Microeconomics - all with Video Answers

Educators

ER

Chapter Questions

02:21

Problem 1

Because Elaine has a family history of significant
medical problems, she buys health insurance,
whereas her friend Jerry, who has a healthier family,
goes without. This is an example of
a. moral hazard.
b. adverse selection.
c. signaling.
d. screening.

Achintya Suden
Achintya Suden
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02:21

Problem 2

George has a life insurance policy that pays his family
$\$ 1$ million if he dies. As a result, he does not hesitate
to enjoy his favorite hobby of bungee jumping. This is
an example of
a. moral hazard.
b. adverse selection.
C. Signaling.
d. screening.

Achintya Suden
Achintya Suden
Numerade Educator
03:30

Problem 3

Before selling anyone a health insurance policy, the
Kramer Insurance Company requires that applicants
undergo a medical examination. Those with signifi-
cant preexisting medical problems are charged more.
This is an example of
a. moral hazard.
b. adverse selection.
c. signaling.
d. screening.

ER
Ethan Renner
Numerade Educator
01:37

Problem 4

The Condorcet paradox illustrates Arrow's impossibil-
ity theorem by showing that pairwise majority voting
a. is inconsistent with the principle of unanimity.
b. leads to social preferences that are not transitive.
c. violates the independence of irrelevant
alternatives.
d. makes one person in effect a dictator.

Goutam Chand
Goutam Chand
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01:42

Problem 5

Two political candidates are vying for town mayor, and
the key issue is how much to spend on the annual
Fourth of July fireworks. Among the 100 voters, 40
want to spend $\$ 30,000,30$ want to spend $\$ 10,000,$
and 30 want to spend nothing at all. What is the win-
ning position on this issue?
a. $\$ 10,000$
b. $\$ 15,000$
c. $\$ 20,000$
d. $\$ 30,000$

Nick Johnson
Nick Johnson
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05:28

Problem 6

The experiment called the ultimatum game illustrates
that people
a. are overconfident in their own abilities.
b. play the Nash equilibrium in strategic situations.
c. care about fairness, even to their own detriment.
d. make inconsistent decisions over time.

Manasvee Singh
Manasvee Singh
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