test4fall2005 - Dr Cliff Lipscomb Principles of...

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Dr. Cliff Lipscomb Version ____ Principles of Microeconomics Fall 2005 Exam 4 – 50 questions 1. Our class discussion of the used car market illustrates the idea of a. adverse selection b. moral hazard c. “lemons” d. Both A and C e. Both B and C 2. A high quality vehicle in a used car market is commonly referred to as a a. lemon b. orange c. pineapple d. plum 3. What is the expected value a consumer is willing to pay for a used car if low quality cars are $2000, high quality cars are $5000, and the consumer expects a 50/50 chance of purchasing a low quality car? a. $3700 b. $3500 c. $3200 d. $3000 4. True or False: The presence of low-quality goods in a market increases the price consumers are willing to pay for goods in a mixed market, like the used car market. a. True b. False 5. What is a popular response to the problem of adverse selection in insurance markets? a. providing insurance to self-employed persons b. providing group insurance c. both A and B d. none of the above 6. The idea that insurance may encourage abnormally risky behavior is known as a. adverse selection b. moral hazard c. group insurance d. market segmentation 7. In responding to the lemons problem, consumers can a. invest in more information about the good to be purchased b. ask for money-back guarantees from the seller of the good c. ask for lemons laws (requires sellers to buy back the good) to be enforced d. all of the above
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Dr. Cliff Lipscomb Version ____ 8. Those characteristics of a job that cannot be quantified, like job prestige, are known as a. pecuniary characteristics b. worker preferences c. labor immobility d. nonpecuniary characteristics 9. In labor markets, the supply of skilled workers is ____ the supply of unskilled workers. a. more than b. less than c. equal to 10. In labor markets, the demand for skilled workers is ____ the demand for unskilled workers. a. more than b. less than c. equal to 11. Which kind of tax increases in percentage terms as a person’s income increases? a. regressive b. proportional c. progressive d. flat tax 12. The primary source of federal government funding is the _____. Then, the biggest federal government expenditure (about 22%) is _____. a. federal excise tax; Social Security b. federal income tax; Medicaid c. federal income tax; Medicare d. federal income tax; Social Security 13. The primary source of state government funding is ____. Then, the most state government expenditures (about 35%) are spent on _____. a. state sales tax; K-12 education b. state sales tax; college and university education c. state sales tax; public welfare d. state excise tax; public welfare 14. The primary source of local government funding is ____. Then, the most local government expenditures (about 44%) are spent on ____.
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This note was uploaded on 11/16/2011 for the course ECON 2106 taught by Professor Staff during the Fall '08 term at Valdosta State University .

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test4fall2005 - Dr Cliff Lipscomb Principles of...

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