8 Questions with answers on docsity-midterm-
exam-3-with-answers-microeconomic-
principles-econ-103pdf
You'll find the list of questions at the end of the document
1. What is the economic reason for the difference in average hourly
wages between workers in Sri Lanka and the USA?
C. American labor is more productive because our workers are paid more
than workers in Sri Lanka.
2. At what quantity would a firm maximize profits?
C. Where marginal cost is equal to marginal revenue.
3. Which of the following is not true with respect to relative price?
B. The price of the good is determined by all other variables.
4. If the bank pays savers 3.5%, charges borrowers 7%, has 1.5%
administration expenses, and has $2 million in loanable funds, what
are the bank's total profits?
A. $60,000.
5. Which of the following is not true about advertising?
A. Advertising lowers prices and is a form of competition.
6. Which of the following statements about monopolies is not true?
B. Perfect price discriminating monopolists do not restrict output but raise
price as compared to the perfect price competition market.
7. What is the main economic reason for the existence of financial
intermediaries like banks?
D. They lower transactions costs.
8. If the coefficient of elasticity is +1.7, what can be inferred?
A. Supply is elastic.
