LYCEUM OF THE PHILIPPINES LAGUNA

Km. 54 National Highway, Makiling, Calamba Laguna

COLLEGE OF BUSINESS AND ACCOUNTANCY

PRELIM EXAMINATION Summer SY 2017-2018
Subject: BASIC ECONOMICS WITH TAXATION AND LAND REFORM
Teacher: Ms. Jeyah Clarish Ilagan

Multiple choice. Encircle the best answer.

1. Which is the most accurate definition of the study of economics? Economics is the study of
A) the distribution of surplus goods to those in need.
B) affluence in a morally bankrupt world.
C) ways to reduce wants to eliminate the problem of scarcity.
D) the choices we make because of scarcity

2. Which of the following is a macroeconomic topic?

A) why plumbers earn more than janitors
B) the reasons for the rise in average prices
C) whether the army should buy more tanks or more rockets
D) the reasons for a rise in the price of orange juice

3. Extreme form of Market economy.

A) Monopolist
B) Communist
C) Laissez-faire Economy
D) Lazy-fair Economy

4. Which of the following is a microeconomic topic?

A) the reasons for a decline in average prices
B) the reasons why Kathy buys less orange juice
C) the cause of why total employment may decrease
D) the effect of the government budget deficit on inflation

5. Economics is best defined as the study of how people, businesses, governments, and societies
A) make choices to cope with scarcity.
B) attain wealth.
C) choose abundance over scarcity.
D) use their infinite resources.

6. Microeconomics focuses on all of the following EXCEPT

A) the effect of increasing the money supply on inflation.
B) the purchasing decisions that an individual consumer makes.
C) the effect of an increase in the tax on cigarettes on cigarette sales.
D) the hiring decisions that a business makes.

7. In broad terms the difference between microeconomics and macroeconomics is that

A) microeconomics studies the effects of government taxes on the national unemployment rate.
B) macroeconomics studies the effects of government regulation and taxes on the price of
individual goods and services whereas microeconomics does not.
C) they use different sets of tools and ideas.
D) microeconomics studies decisions of individual people and firms and macroeconomics studies
the entire national economy.

8. Studying the determination of prices in individual markets is primarily a concern of

A) negative economics.
B) microeconomics.
C) positive economics.
D) macroeconomics.

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9. Which of the following is a macroeconomic issue?
A) how federal government budget deficits affect interest rates
B) the cause of a decline in the price of peanut butter
C) what determines the amount a firm will produce
D) how a rise in the price of sugar affects the market for sodas

10. Which of the following is an issue in macroeconomics?

A) the purchasing decisions that an individual consumer makes
B) the effect of an increase in the tax on cigarettes on cigarette sales
C) the hiring decisions that a business makes
D) the effect of increasing the money supply on inflation

11. Which of the following is NOT a factor of production?

A) the water used to cool a nuclear power plant.
B) the wages paid to workers.
C) the effort of farmers raising cattle.
D) the management skill of a small business owner.

12. Macroeconomic topics include

A) the impact of government regulation of markets.
B) total, nationwide employment.
C) studying what factors influence the price and quantity of automobiles.
D) studying the determination of wages and production costs in the software industry

13. An autoworker is considered ________ and earns ________.

A) labor; wages
B) labor; rent
C) capital; rent
D) entrepreneurship; wages

14. Macroeconomics is the branch of economics that studies

A) prices of individual goods.
B) important, as opposed to trivial, issues.
C) the way individual markets work.
D) the economy as a whole

15. Which of the following is NOT a factor of production?

A) a share of stock issued by a firm.
B) a new computer used by a small business owner.
C) a tractor used by a wheat farmer.
D) the time worked by elementary school teachers.

16. Opportunity cost means

A) the accounting cost minus the marginal benefit.
B) the highest-valued alternative forgone.
C) the monetary costs of an activity.
D) the accounting cost minus the marginal cost.

17. An economy in which the government makes all important decisions about production and
distribution.
A) Market Economy
B) Mixed Economy
C) Modern Economy
D) Command Economy

18. The opportunity cost of any action is

A) the time required but not the monetary cost.
B) all the possible alternatives forgone.
C) the highest-valued alternative forgone.
D) the monetary cost but not the time required.
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19. A mechanism through which buyers and sellers interact to determine prices and exchange goods,
services and assets.
A) Economy
B) Money
C) Market
D) Trade

20. Which of the following is NOT an example of an opportunity cost?

A) Because David used all of his vacation time to paint his house, he was unable to visit the
Caribbean last year.
B) By choosing to attend college, Jean was not able to continue working as an electrician; as a
result, she gave up more than $85,000 in earnings while she was in college.
C) Because Mary is now being paid a higher wage, she can afford to buy a new car even though
she is moving into a bigger apartment.
D) By spending Thursday night studying for an economics exam, a student was unable to
complete a homework assignment for calculus class.

21. Allowing only one factor to vary at any given time, keeping all other factors constant, is using the
technique of
A) post hoc. B) compensation. C) ceteris paribus. D) composition.

22. Ceteris paribus is the Latin expression for

A) a statement about the way the economic world ought to be.
B) an expression that means "other things being equal."
C) the (false) statement that what is true of the parts is true of the whole or what is true of the
whole is true of the parts.
D) the error of reasoning that a first event causes a second event because the first event occurred
before the second event.

23. The fallacy of composition is the false belief that

A) what is true for the parts is also true for the whole.
B) the ceteris paribus condition does not apply.
C) because event A occurred before event B, event A caused event B.
D) because event A occurred after event B, event A caused event B.

24. You are not surprised that it has started to rain. After all, a hour ago you just finished washing
your car. Your reasoning is an example of
A) the ceteris paribus assumption.
B) the distinction between positive and normative statements.
C) the post hoc fallacy.
D) the fallacy of composition.

25. The fallacy of composition is evident in which of the following statements?

A) "What is bad for the Joneses is bad for the Smiths."
B) "X and Y go together, therefore X has caused Y."
C) "If each farmer works harder, all farmers will be richer."
D) "Technological progress helps everybody."

26. The post hoc, ergo propter hoc fallacy is

A) a statement about the way the economic world ought to be.
B) the error of reasoning that a first event causes a second event because the first event occurred
before the second event.
C) an expression that means "other things being equal."
D) the (false) statement that what is true of the parts is true of the whole or what is true of the
whole is true of the parts.

27. A rooster crows and then the sun rises. The rooster thinks that the sun rises because he crows.
And he is very proud of it. The rooster falls prey to
A) the fallacy of composition.
B) his self interest.
C) marginal thinking.
D) the post hoc fallacy

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 28. "Every time I go to a basketball game, our team wins." This statement is an example of
A) a normative economic statement.
B) fallacy of composition.
C) post hoc fallacy.
D) ceteris paribus fallacy.

29. The fact that wants cannot be fully satisfied with available resources reflects the definition of
A) scarcity. B) the big tradeoff. C) the what tradeoff. D) for whom to produce

30. One student in a football stadium with 30,000 students can see the game better if he or she stands
up. Assuming that all 30,000 students can each see the game better if they all stand is an example
of the
A) fallacy of large numbers.
B) post hoc fallacy.
C) fallacy of composition.
D) fallacy of ceteris paribus.

31. Economics can be defined as the social science that explains the ________.
A) choices that we make as we cope with scarcity
B) choices made by households
C) choices made by politicians
D) choices we make when we trade in markets

32. Scarcity is a situation in which ________.

A) something is being wasted
B) long lines form at gas stations
C) some people are poor and others are rich
D) we are unable to satisfy all our wants

33. Microeconomics is the study of ________.

A) the global economy
B) the choices that individuals and businesses make
C) the national economy
D) all aspects of scarcity

34. Which statement is an example of the post hoc fallacy?

A) Fans crowding into a college football stadium cause the football game to be played.
B) The reason cows are not an endangered species is because many people eat beef.
C) Hold everything constant except the price of juice.
D) There should be equal access to public transportation.

35. The three main functions of government in market economy except:

A) Foster macroeconomic stability and growth through fiscal and monetary policy
B) permits each person and country to use the best advantage the specific skills and resources
that are available
C) Promote equity by using tax and expenditure programs to redistribute income toward
particular groups
D) Increase efficiency by promoting competition, curbing externalities like pollution, and
providing public goods

For questions 36-40. Refer to the graph.

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 36. What is the maximum amount of wheat that can be produced?
A) 90 tons C) 25 tons
B) 75 tons D) 100 tons

37. How many tons of steel can be produced if you decide to produce 75 tons of wheat?
A) 90 tons C) 25 tons
B) 75 tons D) 100 tons

38. How many tons of steel are forgone if you decide to produce 45 tons of wheat instead of 25?
A) 10 tons C) 25 tons
B) 45 tons D) 50 tons

39. What is the maximum amount of steel that can be produced?

A) 100 tons C) 25 tons
B) 75 tons D) 90 tons

40. What does point F signifies?

A) It means that product A is equal to product B
B) It shows an output combination that is not yet attainable
C) It signifies externalities
D) It is the inefficient combination

Prepared by: Checked by: Approved by:

Jeyah Clarish A. Ilagan Ma. Leonora V. Alusen Mr.Ramon George O.Atento

Instructor Assistant Professor Dean