The idea that a voting scheme cannot be devised that respects individual preferences and gives consistent, nonarbitrary results is known as
A. logrolling.
B. the impossibility theorem.
C. Samuelson's theory.
D. the independence of irrelevant alternatives.
Answer: B
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Bart consumes food and clothing, which are both normal goods. Suppose that the price of food falls. The substitution effect of this price decrease is ________ and the income effect of this price decrease is ________
A) that Bart buys more clothing and less food; that Bart buys more of both food and clothing B) reflected by a change in the relative prices of food and clothing; is represented by a movement along the original indifference curve C) reflected by a parallel shift outward of the budget line; that Bart earns more money each month D) reflected by the change in the slope of the budget line; that Bart has greater purchasing power
A consumer is given the chance to buy a concert ticket for $50 and refuses. Later, that same consumer wins a free ticket to the concert
When asked to sell that ticket for $50, the consumer refuses, indicating that he would rather use the ticket himself. This is an example of A) endowment effect. B) salience. C) framing bias. D) irrational behavior.
Greg spends his entire budget on two goods: he plays video games at the mall arcade and he buys pizza. He discovers that his MU/P of video games is lower than his MU/P of pizza. From this, we know that he would be:
a. happier eating less pizza and playing fewer video games. b. happier eating less pizza and playing more video games. c. happier eating more pizza and playing fewer video games. d. indifferent to which selection he makes. e. as happy as possible, since he is already maximizing total utility.
A person who is risk averse will like gaining $1,000 more than they will dislike losing $1,000
a. True b. False Indicate whether the statement is true or false