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A detailed midterm exam for microeconomic principles (econ 103), covering various key concepts such as labor productivity, relative prices, market structures, and financial intermediaries. the exam includes multiple-choice questions with answers, offering students a valuable opportunity to test their understanding and identify areas needing further review. the questions delve into core economic principles and their applications, making it a useful resource for students to assess their knowledge and prepare for future assessments.
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The difference in average wages between Sri Lanka (12 cents/hour) and the USA ($15/hour) is addressed. The provided options for explaining this difference are: US multinational corporations exploiting workers, government protection of workers in the USA, higher American labor productivity, and employer greed in Sri Lanka.
The question of where a firm maximizes profits is posed. The options include: total revenue equals total cost, marginal revenue equals total revenue, average variable cost equals average revenue, and marginal cost equals average fixed costs.
The question asks which statement is NOT true regarding relative price. One option states that the price of a good is determined by all other variables. Another option states that the prices of other goods affect the relative price of the good.
The question asks what are the bank's total profits if the quantity of loanable funds is $2 million. The possible answers are $60,000, $40,000, $2,200, and $20,000. It is also suggested that there might not be enough information to answer the question.
The question asks which statement about advertising is NOT true. The options include: advertising lowers prices and is a form of competition, advertising is a mechanism for expanding consumer choices.
The question addresses monopolies. It states that a single-price monopolist's marginal revenue curve is above the demand curve because it cannot sell additional output without lowering the price on previous output. It also states that perfect price discriminating monopolists do not restrict output but raise price as compared to the perfect price competition market.
It also suggests that if a perfect price discriminating monopolist cannot prevent resale of its product it will likely become a single-price monopoly.
The question addresses transaction costs. It states that they reduce deadweight loss inefficiencies and lower transactions costs.
The question addresses exchange rates. It states that a decrease in inflation rates in America relative to Britain and a surplus of dollars in Britain relative to Pounds. The cost of goods in the USA is lowered relative to goods in Britain.
The question asks which statement is NOT true concerning cartels in a free market. The options include: cartel members have an incentive to restrict output, cartel members must incur policing costs, cartel members face a prisoner's dilemma, cartel members cannot prevent new competition, and cartel members must prevent all methods of non-price competition.
The question asks which of the following defines the Law of Supply. The options include: an inverse relationship between relative price and quantity demanded, a positive relationship between relative price and quantity demanded, a positive relationship between the relative cost of the good and its elasticity, and a positive relationship between the relative price of the good and the supply.
The question addresses John D. Rockefeller's Standard Oil Company. It states that the company was broken up for behaving as a monopolist. It also states that Standard Oil had only a few competitors in 1911 and that Rockefeller was gaining market share from 1890-1911. It also suggests that the Standard Oil case proved that Rockefeller prevented the introduction of new technologies and new consumer products.
The question describes marginal firms exiting industries X and Z and entering industry Y. It assumes all factors of production are specialized economic goods. The options for inference include: industry Y earns less than the general rate of return, industries X and Z do not earn accounting profits, factor prices in X and Z will rise relative to Y, and consumer good prices in Y have risen relative to X and Z.