You Value Your Favorite Shirt at $100

question 67

Multiple Choice

You value your favorite shirt at $100. Someone else values it at $80, and that person is willing to pay you $80 for your shirt. Would selling your shirt to this person for $80 be Pareto efficient?

• A) Yes, because any time you engage in trade, the result must be Pareto efficient.
• B) No, the person paid you $80 for the shirt so his net benefit was $0, while your net benefit was -$20. For this change to be Pareto efficient, each of you should have the same net benefit.
• C) Yes, because even though you lose from the trade and he gains, there is the potential for him to compensate you for your loss.
• D) No, because both of you are not better off as a result of the trade.

Recognize the levels of measurement appropriate for the use of grouped frequency distribution tables.

Understand the consequences of having many intervals with a frequency of zero in grouped frequency distribution tables.

Understand the principles and purposes of job analysis and its significance in organizational effectiveness.

Distinguish between job analysis, job description, and job specification, and their applications.

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Definitions:

Transitivity

In decision theory, the principle that if preference A is greater than B, and B is greater than C, then A is greater than C.

Arrow's Impossibility Theorem

A theorem that demonstrates the impossibility of devising a social welfare function that satisfies all of a specified set of reasonable conditions simultaneously.

Majority Rule

A decision-making rule in which policies or choices are decided based on the preference of the majority of participants.

Transitive Preferences

A condition in decision-making where if an individual prefers option A over B, and B over C, then the individual also prefers A over C.