The Condorcet paradox shows that
a. allocations of resources based on majority rule are always inefficient.
b. problems in counting votes can negate legitimate democratic outcomes.
c. the order on which things are voted can affect the result.
d. transitive preferences are inconsistent with rationality.
c
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Which of the following is a true statement about real and nominal GDP?
A) Nominal GDP is a better measure than real GDP in comparing changes in the production of goods and service year after year. B) If real GDP increases from one year to the next, we know that production of goods and services has risen. C) Increases in average prices do not affect the calculation of nominal GDP. D) If nominal GDP increases from one year to the next, we know that production of goods and services has risen.
If a bank offers mortgages that do not require the normal 20% down payment, the bank encourages
A) people who know they might not pay off the mortgage. B) people who can't afford the down payment but can pay off the mortgage. C) people who know that they are going to pay off the mortgage. D) people who know they can't pay off the mortgage but who can afford the down payment.
In a principal-agent problem, if the contract used leads to the maximum of the principal's and agent's combined value (profits, payoffs), we can say that this contract features
A) inefficiency in production, since only the principal's profits should be maximized. B) inefficiency in production, since only the agent's payoffs should be maximized. C) efficiency in production. D) inefficiency in production, since the agent's payoffs should be maximized and the principal's profits should be minimized.
If a firm's average cost is declining, setting price equal to marginal cost will
a. maximize the firm's profits. b. minimize the firm's losses. c. guarantee that the firm will lose money. d. help the firm earn the opportunity costs of its resources.