Microeconomics 103 – Rustici (Spring 2016)
Exam 3
1.) Suppose workers in Sir Lanka earn 12 cents an hour on average while workers in the USA earn $15
per hour on average. What is the economic reason for this situation?
A. US multinational corporation exploit workers in small countries by depressing wages.
B. Americans earn more because the government protects workers with minimum wage laws and
encourages unions.
C. American labor is more productive because our workers are paid more than workers in Sir Lanka.
D. Employers in Sri Lanka are greedy and don’t want to pay a “living wage”.
E. None of the above is correct
2.) At what quantity would the firm maximize profits?
A. Where total revenue is equal to total cost
B. Where marginal revenue is equal to total revenue
C. Where average variable cost is equal to average revenue
D. Where marginal cost is equal to average fixed costs
E. This is a trick question: none of the above are correct
3.) Which of the following is not true with respect to relative price?
A. The price of the good affects human values relative to scarcity for the good
B. The price of the good is determined by all other variables
C. The prices of other goods affect the relative price of the good
D. The price of the good can affect the prices of other economic goods
E. The price of the good affects the quantity supply and quantity demand for the good
