MT1S24 Form B

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School

University of Texas, Dallas *

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6303

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Economics

Date

Apr 27, 2024

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pdf

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1 ECO 371M: SOCIAL ECONOMICS: ECONOMICS OUTSIDE THE MARKET Unique # 33880 Spring 2024 Prof. Wiseman Midterm 1 Form B Instructions: 1. The exam should include 5 pages (counting this cover sheet). If your exam is missing any pages, please raise your hand. 2. Write your name and UTEID on BOTH the bubble sheet AND the short answer sheet. Write your test form (A, B, or C, as shown above) on the bubble sheet. 3. For the multiple choice section, answer each question by choosing the single best answer. Mark your chosen answer on your bubble sheet with a #2 pencil. Press firmly and fill in the entire bubble. Light answers will be counted as wrong. Multiple answers will be counted as wrong. 4. For the short answer section, enter your responses on the short answer sheet. Write your answers inside the box provided for each question. Make sure that your responses are legible and dark enough to be scanned clearly. 5. Each question is equally weighted. 6. If a question or answer choice is unclear, please ask for clarification. 7. When you finish, turn in BOTH your bubble sheet AND the short answer sheet. You may keep the rest of the exam. All exams must be turned in by the end of the class period, at 3:15. Late exams will get a score of zero. 8. You are a good economist. Allocate your time accordingly – do the easy questions first. Do not cheat.

2 PART 1: MULTIPLE CHOICE – FILL IN ANSWERS ON BUBBLE SHEET 1. The host of a cable news program insists that we should use a social choice procedure that “reflects the will of the people.” That is, it must always satisfy the Always a Winner property, the monotonicity property, the Pareto property, the Condorcet property, and the Independence of Irrelevant Alternatives property. The host asks you for a recommendation. What do you suggest? a) The Hare system. b) Plurality voting. c) A hybrid of the Condorcet procedure and the Borda count. d) Any SCP that satisfies the Pareto property automatically satisfies the other properties. e) None – there is no SCP that satisfies all those properties. THE NEXT THREE QUESTIONS ARE BASED ON THE FOLLOWING SITUATION: Irving, Muktuk, and Roy must divide a muffin, a fish, and a banana. They assign points to each item as follows: Irving: muffin 70, fish 20, banana 10 Muktuk: muffin 70, fish 20, banana 10 Roy: muffin 45, fish 10, banana 45 2. Which of the following splits is Pareto efficient? a) Irving gets the fish, Roy gets the muffin and the banana. b) Irving gets the muffin, Muktuk gets the fish and the banana. c) Irving gets the muffin, Muktuk gets the fish, and Roy gets the banana. d) All of these splits are Pareto efficient. e) None of these splits are Pareto efficient. 3. Which of the following splits is equitable? a) Irving gets 3/7 of the muffin, Muktuk gets the fish and the banana, and Roy gets 4/7 of the muffin. b) Irving gets ½ of the muffin and ½ of the fish, Muktuk gets ½ of the muffin and ½ of the fish, and Roy gets the banana. c) Irving gets ½ of the muffin, Muktuk gets the banana, and Roy gets ½ of the muffin and all of the fish. d) All of these splits are equitable. e) None of these splits are equitable. 4. Which of the following splits is envy free? a) Irving gets 3/7 of the muffin, Muktuk gets the fish and the banana, and Roy gets 4/7 of the muffin. b) Irving gets ½ of the muffin and ½ of the fish, Muktuk gets ½ of the muffin and ½ of the fish, and Roy gets the banana. c) Irving gets ½ of the muffin, Muktuk gets the banana, and Roy gets ½ of the muffin and all of the fish. d) All of these splits are envy free. e) None of these splits are envy free.

3 THE NEXT THREE QUESTIONS ARE BASED ON THE FOLLOWING SITUATION: Maria values each emerald at $2000 and each pearl at $1200. Kris values each emerald at $1000 and each pearl at $500. Consider the following three allocations: Allocation 1: Maria has 3 emeralds, 5 pearls, and $0. Kris has 5 emeralds, 3 pearls, and $0. Allocation 2: Maria has 2 emeralds, 7 pearls, and $0. Kris has 4 emeralds, 2 pearls, and $1500. Allocation 3: Maria has 2 emeralds, 8 pearls, and $0. Kris has 4 emeralds, 3 pearls, and $0. 5. Which of the following statements about potential Pareto improvement is true? a) Allocation 1 is a potential Pareto improvement over Allocation 2. b) Allocation 1 is a potential Pareto improvement over Allocation 3. c) Allocation 2 is a potential Pareto improvement over Allocation 3. d) No allocation is a potential Pareto improvement over any other allocation. e) Allocation 3 is a potential Pareto allocation over Allocation 1 and Allocation 2. 6. Rank the three allocations according to the Rawlsian criterion. a) Allocation 3 is the best, Allocations 1 and 2 are tied. b) Allocation 2 is the best, then Allocation 1, then Allocation 3. c) Allocation 3 is the worst, Allocations 1 and 2 are tied. d) Allocation 1 is the best, then Allocation 3, then Allocation 2. e) Allocation 2 is the best, then Allocation 3, then Allocation 1. 7. Which of the following statements about Pareto dominance is true? a) Allocation 3 Pareto dominates Allocation 2. b) Allocation 2 Pareto dominates Allocation 1. c) Allocation 1 Pareto dominates Allocation 2. d) Allocation 1 is Pareto dominated by both Allocation 2 and Allocation 3. e) No allocation Pareto dominates any other allocation. 8. We have three voters and four alternatives. There are two possible lists of individual preferences: I : Voter 1: a b d c Voter 2: c a b d Voter 3: b d c a II : Voter 1: b a d c Voter 2: c a b d Voter 3: b d c a These examples can be used to demonstrate which of the following statements? a) The Borda count procedure fails to satisfy the monotonicity condition. b) Sequential pairwise voting with agenda abcd fails to satisfy the Condorcet condition. c) The Condorcet method fails to satisfy the monotonicity condition. d) Sequential pairwise voting with agenda abcd fails to satisfy the Pareto condition. e) Plurality voting fails to satisfy the monotonicity condition.

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