ECONOMICS

1. Microeconomics deals with the study of two market forces that allocate resources.
NOTES What are these two market forces?
A. income and price level C. income and profit
B. demand and supply D. inflation and deflation

2. It is Latin phrase that means “all other forces held constant”. Without this assumption,
it will be difficult to isolate the effects on market outcome of individual factors.
A. Unus Instar Omnium C. Ceteris Paribus
B. Carpe Diem D. Hakuna Matata

3. This refers to the quantity of a commodity in the market that an individual wants to
purchase in a given period of time.
A. Demand C. Stock
B. Supply D. Inventory

4. According to this law, there is an inverse relationship between the price of goods and
its quantity demanded.
A. Law of Supply C. Law of Comparative Advantage
B. Law of Absolute Advantage D. Law of Demand

5. An increase in demand is shown when the demand curve

_________________________.
A. shifts to the right C. shifts to the left
B. does not change D. changes drastically

6. A decrease in demand is shown when the demand curve

_________________________.
A. shifts to the right C. shifts to the left
B. does not change D. changes drastically

7. Quantity demand will decrease if the price of a good or service ___________________.

A. Increases C. decreases
B. does not change D. changes drastically

8. A shift of the demand curve happens when there is a change in__________________.

A. income C. taste and preferences
B. price of goods D. All of the above

9. As the price of ice cream increases, the demand for ice cream cone
___________________.
A. Increases C. decreases
B. does not change D. changes drastically
10. If the price of Sampaloc used for Sinigang goes up, the demand for Camias will
______________.
A. increase C. decrease
B. remain constant D. change drastically

11. The demand for a currently available cellular phone model will _________________ if
a new model is about to come out.
A. remain constant C. decrease
B. increase D. change drastically

12. This refers to a table showing how the quantity of a good or service that consumers
want to purchase changes as the price of that good or service changes.
A. supply matrix C. demand schedule
B. demand matrix D. supply schedule

13. This refers to a table showing how the quantity of a good or service that producers
want to sell changes as the price of that good or service changes.
A. supply matrix C. demand schedule
B. demand matrix D. supply schedule

14. According to this law, an increase in price will lead to an increase in the quantity
supplied of the good while other factors remain constant.
A. Law of Supply C. Law of Demand
B. Law of Market Equilibrium D. Law of Absolute Profit

15. A shift of the supply curve happens when there is a change in _________________.
A. price of inputs C. level of technology
B. number of firms D. All of the above

16. The interaction of demand and supply may result in _____________________.

A. market equilibrium C. shortage or surplus
B. market disequilibrium D. All of the above

17. This condition is reached when the price has adjusted to a level at which the quantity
demanded equals the quantity supplied.
A. market equilibrium C. inflation
B. market disequilibrium D. deflation

18. This refers to the maximum price above which the price charged by suppliers for a
commodity is not permitted to rise.
A. mark down price C. price ceiling
B. price floor D. mark up price
19. This refers to the minimum price below which the price buyers pay for a commodity is
not permitted to fall.
A. mark down price C. price ceiling
B. price floor D. mark up price

20. This term refers to a mechanism or arrangement whereby buyers and sellers interact
and in the process determine the price and quantity bought and sold.
A. Investment C. business
B. Market D. income generation

21. In this kind of market structure, every buyer and seller takes the market price as given,
and depending on the price, decides on the quantity to buy and sell, respectively.
A. Oligopoly C. perfectly competitive market
B. Monopoly D. imperfectly competitive market

22. The following conditions are necessary for perfect competition to exist. Which of the
following is INCORRECT?
A. the existence of a large number of buyers and sellers
B. the items sold by different firms are all the same
C. perfect information exists in the market
D. transactions involving buying and selling entail additional costs

23. This kind of market structure exists when there is only one seller of a product or
service and the product or service has no close substitutes.
A. Oligopoly C. monopoly
B. perfectly competitive market D. monopolistic competition

24. The owner of an essential input and supply chain in production as well as high cost of
capital inputs needed to start a business are some examples of what kind of barrier?
A. structural barrier C. strategic barrier
B. market barrier D. legal barrier

25. This kind of barrier is being showed when a monopolist discourages entry of new firms
by charging a very low price that new entrants cannot match.
A. structural barrier C. strategic barrier
B. market barrier D. legal barrier

26. What kind of barrier is being showed when franchises, patents and copyrights give
some firms exclusive use over a successful business model, inventions or innovations
over a period of time?
A. structural barrier C. strategic barrier
B. market barrier D. legal barrier
27. This refers to a market structure where there are only few sellers and the actions of
any seller can influence the market price.
A. Oligopoly C. monopoly
B. perfectly competitive market D. monopolistic competition

28. This refers to a market structure that has characteristics associated with perfect
competition and imperfect competition.
A. Oligopoly C. monopoly
B. Perfectly competitive market D. monopolistic competition

29. This refers to the market value of all final goods and services produced within a
country during a given year.
A. Gross National Product C. Gross Domestic Product
B. Gross National Profit D. Gross Domestic Profit

30. The ______________________ of the Philippines is the sum of income earned by

permanent residents of the country including the income earned by Filipinos abroad.
A. Gross National Product C. Gross Domestic Product
B. Gross National Profit D. Gross Domestic Profit

31. One way of calculating GDP is to add up consumer spending on goods and services;
investment spending by firms; government spending on goods and services; and
exports, then subtract the value of imports. What do we call this approach?
A. Value Added Approach C. Capital Approach
B. Expenditure Approach D. Income Approach

32. This term refers to a general increase in all prices thus decreases a currency’s
purchasing power.
A. Deflation C. Price ceiling
B. Price index D. Inflation

33. The following are effects of inflation, EXCEPT:

A. People with fixed income lose because their income could buy less goods
and services.
B. Lenders and bank savers lose when inflation rate is greater than the
interest rate.
C. Lenders and bank savers lose when inflation rate is lesser than the interest
rate.
D. Borrowers could benefit from inflation.

34. A ________________ allows us to track the movements of prices in an economy. It also

refers to a number that represents the overall price of goods and services.
A. Deflation C. price ceiling
B. price index D. inflation

35. A person is considered _____________________ at a particular period of time if he or

she has been working at a paid job for at least some minimum amount of time during a
reference period.
A. Employed C. Underemployed
B. Unemployed D. Over employed
36. A person is considered _____________________ if he or she is without a job and is
looking for a job, or is waiting for the start of a new job, or is on temporary layoff.
A. Employed C. underemployed
B. Unemployed D. overemployed

37. A person is considered _____________________ if he or she has been working at a

paid job but is willing to work for more hours or is willing to have another job with
longer work hours.
A. Employed C. Underemployed
B. Unemployed D. Over employed

38. The following are functions of money, EXCEPT:

A. medium of exchange C. investment profit
B. unit of account D. store of value

39. Money is given to sellers in exchange for their product or service. People use an item
as money because they are certain that it will be accepted in transactions that allow
them to obtain goods and services. What function of money is being showed?
A. Money as a medium of exchange
B. Money as an investment profit
C. Money as a unit of account
D. Money as a store of value

40. Money serves as a yardstick in setting prices and recording debts and profit. What
function of money is being described?
A. Money as a medium of exchange
B. Money as an investment profit
C. Money as a unit of account
D. Money as a store of value

41. Money retains its value over time. Thus, it can be kept for now and spent some time in
the future. What function of money is being described?
A. Money as an investment profit
B. Money as a medium of exchange
C. Money as a store of value
D. Money as a unit of account

42. Monetary policies in the Philippines are set by what organization?

A. Philippine Monetary Fund
B. Philippine Currency Board
C. Philippine Monetary Board
D. BangkoSentralngPilipinas

43. This kind of policy refers to the government’s use of government fund and taxes to
influence the overall demand for goods and services in the economy.
A. Monetary policy C. Fiscal policy
B. Foreign policy D. Investment policy
44. Compensation for services and gain from sale of goods or other properties is the basis
for what kind of tax?
A. Excise tax C. Property tax
B. Estate tax D. Income tax

45. Profits made by selling a financial asset at a price that is higher than its purchase price
is the basis for what kind of tax?
A. Income tax C. Capital Gains tax
B. Estate tax D. Property tax

46. The value of land, improvements to land and personal property is the basis for what
kind of tax?
A. Income tax C. Capital Gains tax
B. Estate tax D. Property tax

47. The value of goods manufactured or produced in the Philippines for domestic sale or
consumption is the basis for what kind of tax?
A. Income tax C. Estate tax
B. Excise tax D. Capital Gains tax

48. The value of sale or lease of properties, goods or services is the basis for what kind of
tax?
A. Value-added tax C. Capital Gains tax
B. Property tax D. Sales tax

49. The value of property transferred between two or more people who are living at the
time of transfer is the basis for what kind of tax?
A. Property tax C. Sales tax
B. Excise tax D. Gift or Donor’s tax

50. The value of transfers from a deceased person to its legal heirs and beneficiaries is the
basis for what kind of tax?
A. Estate tax C. Gift or Donor’s tax
B. Property tax D. Excise tax

51. The value of goods transferred across international border is the basis for what kind of
tax?
A. Excise tax C. Property tax
B. Customs Duty tax D. Estate tax

52. The value of sales of certain goods and services to its final end user is the basis for
what kind of tax?
A. Capital Gains tax C. Sales tax
B. Property tax D. Income tax

53. If a supply curve for a good is price elastic, then the ____________________________
to changes in the price of that good.
A. quantity supplied is sensitive C. quantity demanded is insensitive
B. quantity demanded is sensitive D. quantity supplied is insensitive
54. If a fisherman must sell all of his daily catch before it spoils for whatever price he is
offered, once the fish are caught the fisherman's price elasticity of supply for fresh fish is -
_________.
A. zero C. infinite
B. one D. two

55. If supply is price inelastic, the value of the price elasticity of supply must be ______.
A. infinite C. zero
B. less than 1 D. greater than 1

56. If there is excess capacity in a production facility, it is likely that the firm's supply curve
is_________________.
a. price inelastic
b. unit price inelastic
c. unit price elastic
d. price elastic

57. If demand is linear (a straight line), then price elasticity of demand is

________________________________.
a. elastic in the upper portion and inelastic in the lower portion
b.inelastic in the upper portion and elastic in the lower portion.
c. inelastic throughout
d. elastic throughout

58. If consumers think that there are very few substitutes for a good, then
______________________________.
a. supply would tend to be price elastic
b. demand would tend to be price elastic
c. demand would tend to be price inelastic
d.supply would tend to be price elastic

59. Which of the following would cause a demand curve for a good to be price inelastic?
a. The good is a luxury.
b. There are a great number of substitutes for the good.
c. The good is a necessity.
d. The good is not a necessity.

60. In general, a steeper supply curve is more likely to be _________________________.

A. Price elastic C. unit price inelastic
B. unit price elastic D. price inelastic
61. The terms oikos + nomos(later on oeconomia) were known to mean?
A. resources management C. income management
B. household management D. materials management

62. Survival requirements of man are technically called?

A. needs C. demands
B. wants D. none of the above
63. Tangible products are correctly termed as?
A. products C. services
B. goods D. none of the above

64. Production orientation that largely uses more machines is called?

A. labor-intensive production C. intermediate production
B. capital-intensive production D. none of the above

65. Traditional distribution methods are also known as?

A. direct distribution methods C. both A and B
B. indirect distribution methods D. neither A and B

66. The economic activity involved in the manufacturing of goods is known as the activity of?
A. production C. exchange
B. distribution D. consumption

67. Goods that are necessities to most – if not all – people in a country are known as?
A. basic goods C. public goods
B. luxury goods D. free goods

68. The factor of production that encompasses all man – made resources is called?
A. capital C. land
B. entrepreneurship D. labor

69. The factor of production that encompasses manpower requirement in an enterprise is

termed as?
A. capital C. land
B. entrepreneurship D. labor

70. The payment for the factor of production known as capital is known as?
A. interest C. rent
B. profit D. salaries and wages

71. The economic system that prevails over many communistic countries and states is?
A. Traditional economic system C. Command economic system
B. Market economic system D. Mixed economic system

72. The ability to use the various factors of production to produce products is called?
A. capital C. land
B. entrepreneurship D. labor

73. The basic economic activity specifically designed to bring products from producers to
consumers is known as?
A. production C. exchange
B. distribution D. consumption

74. Satisfaction of consumers is largely determined in what economic activity?

A. production C. exchange
B. distribution D. consumption
75. The branch of economics that tackles more individual behavior and decisions, mostly of
households or firms is called?
A. Microeconomics C. both A and B
B. Macroeconomics D. Neither A or B

76. Modern economics today already use the type of economic system called?
A. Traditional economic system C. Command economic system
B. Market economic system D. Mixed economic system

77. Monopoly is a market structure mainly characterized by?

A. a single buyer C. a single seller
B. few buyers D. few sellers

78. Oligopoly is a market structure mainly characterized by?

A. a single buyer C. a single seller
B. few buyers D. few sellers

79. Sellers in an industry of Pure Competition are usually?

A. Price takers C. both A and B
B. Price makers D. neither A nor B

80. Monopsony is a market structure very similar to a/an?

A. Monopoly C. Pure Competition
B. Oligopoly D. Monopolistic Competition

81. Monopoly is a market structure mainly characterized by?

A. Unique products C. Standardized products
B. Homogenous products D. Differentiated products

82. Oligopoly is a market structure mainly characterized by?

A. Absolute price influence on the part of the seller.
B. Very strong price influence on the part of the seller.
C. Absolute price influence on the part of the buyer.
D. Very strong price influence on the part of the buyer.

83. Monopolistic competition is a market structure that has?

A. One seller in the industry. C. Many sellers in the industry.
B. Few sellers in the industry. D. none of the above

84. Buyers in an industry of Pure Competition are normally?

A. few C. neither A nor B
B. many D. hard to determine

85. Monopolistic is a market structure that can be differentiated from a monopoly in terms
of their _______?
A. number of buyers C. both A and B
B. number of sellers D. neither A nor B
 86. Which of the following best defines opportunity cost?
A. It is the cost of labor used in the production process.
B. It is the cost of producing those goods most desired by a given economy.
C. It is the cost of the input mix that will lead to the greatest rate of growth for a
given company.
D. It is the amount of one product that must be given up in order to produce an
additional unit of another product.

87. Which of the following explains why a production possibilities curve is often
represented as concave (bowed out) from the origin?
A. Constant returns to scale C. Increasing opportunity cost
B. Decreasing opportunity cost D. The law of demand

88. Assume that consumers consider corn and cassava to be substitutes. A significant
decrease in the supply of corn will affect the cassava market by?
A. decreasing the demand for cassava and therefore the price of cassava.
B. decreasing the supply of cassava and therefore the price of cassava.
C. increasing the demand for cassava and therefore the supply of cassava.
D. increasing the demand for cassava and therefore the price of cassava.

89. In which of the following market structures do firms recognize their mutual
interdependence?
A. Monopoly C. Oligopoly
B. Monopsony D. Perfect competition

90. Following a prolonged power outage, the price of flashlights normally increases
significantly. If cities had passed laws prohibiting price increases for flashlights, during
power outages such laws would most likely?
A. create a shortage of flashlights
B. have no effect on the availability of flashlights
C. make flashlights more available
D. shift the demand curve for flashlights to the right

91. Which of the following best describes an oligopolistic market?

A. A few competing sellers of identical products and no barriers to entry.
B. A few competing sellers with similar products and high barriers to entry.
C. Many sellers, each with a clearly differentiated product, and no barriers to entry.
D. Many sellers with identical products and no barriers to entry.

92. In which of the following situations is a good example of NOT scarce?

A. Consumers give up nothing to obtain more of the good.
B. Consumers can purchase as much of the good as they want at its current market
price.
C. Large quantities of the good are available in the market place.
D. There is a surplus of the good at some positive price.

93. This is the amount spent by consumers, businesses and government within a country
on final goods and services.
A. Average level of price. C. Inflation Rate
B. Consumer Price Index (CPI) D. Gross Domestic Purchase
94. The annual percentage change in the average price level is?
A. Average level of price. C. Inflation Rate
B. Consumer Price Index (CPI) D. Gross Domestic Purchase

95. This is a measure of how much it costs to purchase a market basket of goods and
services.
A. Average level of price. C. Inflation Rate
B. Consumer Price Index (CPI) D. Gross Domestic Purchase

96. This is a measure that tracks the average price level from a base year.
A. Average level of price. C. Inflation Rate
B. Consumer Price Index (CPI) D. Gross Domestic Purchase

97. The goods and services that are bought by the ultimate users is called?
A. Consumer Price Index (CPI) C. Inflation rate
B. Final goods and services D. Relative price shift

98. A situation where the inflation rate of a good or service is significantly higher or lower
than the overall inflation rate.
A. Consumer Price Index (CPI) C. Inflation rate
B. Final goods and services D. Relative price shift

99. An increase in which of the following would cause the aggregate demand curve to shift
to the left?
A. Consumer optimism C. Income taxes
B. Cost of resources D. Population

100. Policies intended to reduce demand – pull inflation are most likely to increase which
of the following in the short run?
A. Gross domestic product C. The price level
B. The labor force rate D. Unemployment

101. An increase in which of the following would least likely increase labor productivity?
A. Human capital C. Technological improvements
B. Physical capital D. The labor force

102. Advocates of a monetary rule recommend increasing the money supply at a rate that
is equal to the rate of increase in which of the following?
A. Level of imports C. Long - run real gross domestic product
B. Level of exports D. Price level

103. Which of the following is the best example of a pure public good?
A. Electricity from a public utility. C. Mail delivery service by the post office
B. Imported oil D. National defense

104. This is the amount of money that a worker is paid based on the number of hours,
days, etc.
A. Income C. Salary
B. Profit D. Wage

105. An amount of money that an employee is paid each year.

A. Income C. Salary
B. Profit D. Wage
106. Assume that China can produce one computer using 20 resource units or one bicycle using
10 units, while India can produce one computer using 10 resource units and one
bicycle using 30 resource units. If China and India agree to specialize and trade, which
country will export bicycles?
A. China C. Both A and B
B. India D. Neither A nor B

107. Which of the following is synonymous with Factors of Production?

A. Aggregate Supply C. Goods and Services
B. Economic Resources D. Real Output

108. The following are the agencies concerned in information and education to facilitate sound
choice and the proper exercise of rights by the consumer EXCEPT:
A. Department of Agriculture C. Department of Trade and Industry
B. Department of Health D. National Food Authority

109. The opportunity cost of a good is?

A. The expenditure of a good.
B. The loss of interest in using savings.
C. The time lost in finding it.
D. The quantity of other goods sacrificed to get another unto of that good.

110. A market can accurately be described as?

A. A place to buy things.
B. A place to sell things.
C. A place where buyers and sellers meet.
D. The process by which prices adjust to reconcile the allocation of resources.

111. What term refers to the social science concerned with how individuals, institutions, and
society make choices under conditions of scarcity?
A. economic perspective C. marginal analysis
B. economics D. scientific method

112. This refers to the inputs or forms of production, used to produce the goods and services
that people want.
A. Resources C. scarcity
B. opportunity cost D. wages

113. The managerial and organizational skills needed to start a firm, combined with the
willingness to take risks refers to__________.
A. physical capital C. entrepreneurial ability
B. service D. economic thinking

114. This occurs when the amount people desire exceeds the amount available at a zero price.
A. service C. scarcity
B. demand D. supply

115.What term refers to the value of the good, service, or time forgone to obtain something
else?
A. economic problem C. rational self-interest
B. capital D. opportunity cost
116.A set of arrangements through which buyers and sellers carry out exchange at mutually
agreeable terms refers to__________.
A. Interest C. market
B. Labor D. contract

117.This refers to the comparison of marginal benefits and marginal costs, usually for decision
making.
A. Marginalism C. margin
B. marginal analysis D. equal assumption

118.The diagram that outlines the flow of resources, products, income and revenue among
economic decision markers is called__________.
A. circular-flow model C. economic model
B. economic slope D. economic chart

119.These are collections of specific economic units treated as if they were one unit.
A. Microeconomics C. principles
B. Aggregate D. necessities

120.What term refers to the study of the economic behavior of entire economics?
A. Microeconomics C. macroeconomics
B. market economy D. economy

121.These term refers to the incremental, additional or extra and is used to describe a change
in an economic value.
A. Fluctuation C. consumer reports
B. Microeconomics D. marginal

122.What term refers to the study of the economic behavior in particular markets, such as that
for computer or unskilled labor?
A. marginal analysis C. microeconomics
B. macroeconomics D. scientific method

123.These are products and services that directly satisfy consumer wants.
A. consumer goods C. capital goods
B. production D. can goods

124.A payment given to resource owners for their labor refers to_________.
A. Interest C. good
B. Wages D. profit

125.A type of capital that consists of factories, machineries, tools, buildings and other human
creations employed to produce goods and services.
A. capital C. behavioral capital
B. natural resources D. physical capital

126.What term refers to the so-called gift of nature used to produce goods and services which
includes renewable and exhaustible resources?
A. fake resources C. resource market
B. natural resources D. human resources
127.This is a systematic pursuit of knowledge by observing facts and formulating and testing
hypotheses to obtain theories, principles, and laws.
A. Theory C. investigation
B. Generalization D. scientific investigation

130.These refers to a viewpoint that envisions individuals and institutions making rational
decisions by comparing the marginal benefits and marginal cost of their actions.
A. purposeful behavior C. marginalism
B. economic perspective D. opportunity cost

131.It refers to the assumption that factors other than those being considered do not change.
A. ceteris paribus C. generalizations
B. principles D. assumptions

132.What term refers to the purchase of capital resources?

A. Capital C. investment
B. Land D. labor

133.This is a factor of production that include mineral, and oil deposits, arable land, forests and
water resources.
A. labor C. capital
B. land D. entrepreneurial ability

134.This refers to an assumption that describes the expected behavior of economic decision
makers and what motivates them.
A. other-things-constant assumption C. behavioral assumptions
B. science assumption D. physical assumption

135.What term refers to mathematical models that allow for possible solutions when distinct
economic agents interact in a market?
A. equilibrium solutions C. expressions
B. predictive value D. economic solutions

136.A statement that can be proved or disproved by reference to facts is called__________.

A. normative economic statement C. negative economic statement
B. hypotheses statement D. positive economic statement

137.It represents the consumers reference, purchasing power, and their willingness to pay for
a thing of value.
A. demand side C. supply side
B. capital side D. labor side

138.It is a law that asserts that the quantity demanded of a good and/or services is inversely
related to its own price.
A. law of supply C. opportunity cost
B. law of demand D. law of consumption

139.What term refers when the percentage change in quantity demanded is greater than the
percentage change in price?
A. price elasticity C. price inelasticity
B. perfectly inelastic D. perfectly inelastic
140.The over-all level of satisfaction derived from consuming a good or service is
called__________.
A. ordinal utility approach C. marginal utility
B. cardinal utility D. total utility

141.What term refers if the percentage change in quantity demanded is exactly equal to the
percentage change in price?
A. price elastic C. price inelastic
B. unit elastic D. sub-unit elastic

142.This refers to the measure of how much the quantity demanded of a certain good change
as a result of a relative change in its price.
A. price elasticity of supply C. own price elasticity of demand
B. price elasticity D. price elasticity of products

143. Which of the following is NOT a purpose of economic analysis?

A. It serves as a basis of policy formulation
B. It aids in understanding how an economy operates because it explains how
economic variables are related to one another
C. It permits prediction of the results of change in the economic variables
D. It is responsible for the unemployment of labor or other resources

144.All of the following are elements involved in the objective of satisfaction EXCEPT:
A. empirical validation
B. human wants
C. use of resources
D. technique of production which shows how resources are used and combined in
production

145.This refers to the recognition of the interdependence of all decision units and all markets
in the economic system.
A. partial equilibrium analysis C. comparative statics
B. general equilibrium analysis D. dynamic analysis

146.What is the determinant of market equilibrium for a commodity?

A. the market demand for the community
B. the market supply of the commodity
C. the balancing forces of the demand and supply of the commodity
D. cannot be determined

147.Which of the following is not classifiable as a natural resource?

A. Land C. capital
B. Minerals D. forests

148.The economic problem determines who much of the wants of each consumer are to be
satisfied.
A. what to produce? C. how to produce?
B. how much to produce? D. for whom to produce?

149.These are goods that are required for man’s survival.

A. essential goods C. luxuries
B. created wants D. all of these
150.What term refers to goods bought for the status and prestige they give to the consumer
and are bought when the price is high?
A. prestige goods C. substitute goods
B. inferior goods D. complementary goods

151.Which of the following BEST describes the inadequate infrastructure?

A. These are heavy fixed costs that cannot be withdrawn from the market
B. Some investments require enormous costs to put up
C. Inadequacy of support infrastructure prevents investments from taking place
D. Established firms own superior production technique learned through experience
or research and development

152.Which of the following is the basic characteristic of Oligopoly?

A. a few sellers and one buyer C. a few sellers and many buyers
B. a few sellers and few buyers D. many sellers and few buyers

153.A perfectly competitive market has__________.

A. firms that set their own prices C. only one seller
B. at least a few sellers D. many buyers and sellers

154.The law of demand states that an increase in the price of a good__________.

A. increases the supply of that good
B. decreases the quantity demanded for that good along its demand curve
C. decreases the demand for that good
D. increases the quantity supplied of that good along its supply curve

155.If an increase in consumer incomes leads to a decrease in the demand for camping
equipment, then camping equipment is________.
A. a normal good C. an inferior good
B. a substitute good D. a complementary good

156.An inferior good is one for which an increase in income causes a(n)_________.
A. decrease in supply C. increase in demand
B. increase in supply D. decrease in demand

157.The demand for which of the following is likely to be the most price inelastic?
A. Transportation C. taxi rides
B. bus tickets D. airline tickets

158.If supply is price inelastic, the value of the price elasticity of supply must be_________.
A. Infinite C. zero
B. less than 1 D. greater than 1

159.Which of the following is not a characteristic of a competitive market?

A. There are many buyers and sellers in the market
B. The goods offered for sale are largely the same
C. Firms generate small but positive economic profits in the long run
D. Firms can freely enter or exit the market
160. Which of the following markets would most closely satisfy the requirements for a
competitive market?
A. Electricity C. cable television
B. soft drinks D. milk

161.Which of the following is not a barrier to entry in a monopolized market?

A. A single firm is very large
B. The government gives a single firm the exclusive right to produce some good
C. The costs of production make a single producer more efficient than a large number
of producers
D. A key resource is owned by a single firm

162.A firm whose average total cost continually declines at least to the quantity that could
supply the entire market is known as a_________.
A. natural monopoly C. perfect monopoly
B. government monopoly D. regulated monopoly

163.The inefficiency associated with monopoly is due to_________.

A. underproduction of good C. the monopoly’s profits
B. the monopoly’s losses D. overproduction of good

164.Compared to a perfectly competitive market, a monopoly market will usually

generate_________.
A. higher prices and lower output C. higher prices and higher output
B. lower prices and lower output D. lower prices and higher output

165.An economic system in which business are allowed to produce any goods and services they
wish to is referred to as_________.
A. centrally planned economy C. free enterprise
B. mixed economy D. private economy

166.What does the statement “Profit is the incentive for business” imply?
A. Profit provides a strong reason to reduce investment
B. Profit reduces the need or efficient use of resources
C. Profit provides a reward for the risk and effort involved
D. Profit provides the incentive to increase expenses

167.Which of the following BEST describes “producer goods”?

A. The final product that a producer make
B. The products made by all producers
C. The goods used to produce other goods
D. Equipment but not factories and offices

168.The items consumers buy is called_________.

A. private property C. factors of production
B. producer goods D. consumer goods

169.Who makes the decisions in a free enterprise economy?

A. the consumer and businesses C. the government
B. pets D. voters
170.What are the limitations of a free enterprise system?
A. high taxation and less incentive to work hard
B. uneven distribution of resources
C. restrictions on personal freedoms
D. there are no limitations

171.What is an economic problem every nation has?

A. the problem of meeting every one’s needs C. not enough population
B. too much pollution D. not enough resources

172.These are things that are needed to produce goods and services.
A. efficient use of resources C. factors of production
B. economic systems D. private property

173.Which is not included in the representation of demand slide.

A. Consumer preference C. Purchasing power
B. Suggested retail price D. Willingness to pay for a
thing of value

174.Which statement BEST describe the law of supply.

A. The quantity supplied is positively related to price.
B. The quantity supplied is negatively related to price.
C. The quantity supplied is positively irrelated to price.
D. The quantity supplied is negatively irrelated to price.

175.Which of the factors is not included in the cause of demand to increase or decrease?
A. sale C. income
B. consumer expectations D. number of consumers

176.Which statement BEST describes the market supply.

A. It is the vertical summation of the supply schedules of individual producers.
B. It is the horizontal summation of the supply schedules individual producers.
C. It is the vertical summation of the demand schedules of individual producers.
D. It is the horizontal summation of the demand schedules of individual producers.

177.In the market equilibrium, the clearing amount is called .

A. equilibrium price C. equilibrium quantity
B. equilibrium supply D. equilibrium quality

178.Market equilibrium is obtained, when?

A. supply equals demands C. supply is higher than demand
B. demand equals supply D. demand is higher than supply

179.What concept of elasticity when the percentage change in quantity demanded is greater
than the percentage change in price.
A. unit elastic C. perfectly elastic
B. price inelastic D. price elastic

180.What type of demand when consumers are prepared to buy all they can at some price and
none at all at any other price.
A. unit elastic C. perfectly elastic
B. price inelastic D. price elastic
181.What type of demand if the percentage change in quantity demanded is less than the
percentage change in price.
A. unit elastic C. perfectly elastic
B. price inelastic D. price elastic

182.What type of demand if the percentage change in quantity demanded is exactly equal to
the percentage change in price.
A. unit elastic C. perfectly elastic
B. price inelastic D. price elastic

183.It is also known as the quantity demanded of the good increases as income increases and
the good being studied.
A. normal good C. inferior good
B. complement good D. superior good

184. It is the quantity of a good falls as income increases, the income elasticity takes a negative
value.
A. normal good C. inferior good
B. complement good D. superior good

185.Which statement/s define/s consumer surplus.

I. Central concepts in welfare economics.
II.Is a measure of how much better off a consumer is by being able to buy a good in
the market.
III. Sum of all units produced of the difference between the market price of a good and
the maRginal cost of production.

A. I only C. II and III

B. I and III D. I,II and III

186.Which is not included in the payment or rent in total fixed cost.

A. Land C. labor
B. Buildings D. machinery

187.It is the main difference between the short run and the long run planning horizon.
A. fixed inputs C. total product
B. variable inputs D. input classification

188.It is the study of problems that affect the economy as a whole.

A. microecomics C. macroeconomics
B. classical economics D.keynesian economics

189.It is the percentage of people in the economy who are both able to and looking for work
but who cannot find jobs.
A. cyclinal unemployment C.frictional unemployment
B. structural unemployment D.unemployment rate

190.It is an unemployment resulting from fluctuations in economy activity.

A.cyclinal unemployment C.frictional unemployment
B.structural unemployment D.unemployment rate
191.Which is/are not included in the components of GDP.
I.supply III.net exports
II.consumption IV.government spending

A.I only C.III only

B.I and IV D.II and IV

192.Which statement/s is/are important aspect/s to remember about GDP.

I.It represents a flow.
II.It is a Stock
III.It represents the market value and stock
IV.It represents the market value of final output.

A.I only C.III only

B.III and IV D.I and IV

193.This category under aggregate income that states that it is the largest component of
national income.
A. rent C. profit
B. interest D. compensation of employees

194. What formula should be used in calculating the real gross domestic product.
A. Real GDP=normal GDP/GDP deflator x 100
B. Real GDP=GDP deflator/nominal GDP x 100
C. Real GDP=Real GDP/GDP deflator x 100
D. Real GDP=Nominal GDP/real GDP x 100

195.It is the stock equivalent to the National Income Accounts

A. nominal wealth C. national wealth account
B. real wealth account D. gross national product

196.Which is not a reason for the aggregate demand curve to have a downward slope.
A. international effect C. investment effect
B. .interest rate effect D. money wealth effect

197.Which is not included for the price level to fall.

A. Expectations of falling aggregate demand.
B. Dynamic effects overwhelm the standard effects.
C. Lower asset prices, making society on average feel poorer, even though,
theoretically, it is not actually poorer.
D. Financial panics, triggered by a decline in the value of financial assets, causing
individuals and bank, who relied on those financial assets as collateral for loans, to call
those loans, which forces borrowers to reduce production.

198.Economists generally single out five important sources of growth, which among the
following states the concept of If an economy is to grow, it will need resources.
A. Entrepreneurship C. Technological advancement
B. Available resources D. Investment and accumulated capital
199.Which statement/s is /are not included in the agreement about general policies that are
good for growth.
I.Encouraging saving and investment
II.Encouraging businessmen to loan big amount
III.Providing more of the right kind of education
IV.Promoting policies that allow taking advantage of specialization

a.I only b. II only c. II and IV d. I and III

200. This is institutionalized sector produce intermediate and final products.

a.households b.external sector c.business firms d.public sector

201.This institutionalized own the factors of production and the consumers of the final goods
and services.
a.households b.external sector c.business firms d.public sector

202.Which fundamental questions is not included in economics process of allocating produced

goods and services for the domestics and foreign economics.
a. How will the produced goods and services be distributed among the number of
inhabitants?
b. How do consumption patterns differ among consumers?
c. How will be the owners of the resources be compensated by the use of such
resource?
d. How does the economy allocate the available resources for future consumption?

203.Which is not included in the characteristic of a capitalism.

a. profit motive c. private property
b. no profit motive d. absence of central planning

204.What characteristic BEST describes communism.

a. free competition c. economic freedom
b. private property d. no free competition

205.How many kinds of market structure are included in economics?

a. 5 b. 6 c. 7 d. 8

206.Which of the following statement does not describe monopoly.

a. A single firm sells a product c. The monopolist dictates the prices
b. The product is homogenous d. Entry into the industry is very difficult

207.Which of the factor or determinants of demand does not affect the shift of demand curve.
a. Change in number of buyers c. Change in number of sellers
b. Change in price expectations d. Change in consumer income.

208.Supply curve shifts to the left in the price of goods when the price .
a. increases b. decreases c. stable d. all of the
above

209.Supply curve of taxes shifts to the right when the tax .

a.increases b. decreases c. stable d. all of the above
210.All are definition of investment, EXCEPT.
a. It is considered as a form of business spending.
b. It is technically derived from savings.
c. It is considered as a household spending.
d. It is inversely influenced by interest rates

211.The term tariff and duties are used interchangeably in the tariff and customs code or PD
No. ?
a.1464 b.1446 c.1644 d.1614

212.What article and section states that each local government unit shall have the power to
create its own sources of revenues.
a.Art.V,Sec.10 b.Art.VI,Sec.10 c.Art.X,Sec.5 d.Art.X,Sec.10

213.Which government entity is exempted from tax.

a.GSIS b.CHR c.SSS d.PAGCOR

214.The rule of taxation shall be uniform and equitable, of theconstitution under section 28 of
what article?
a.VI b.VII c.VIII d.IX

215.Which of the following statement is excluded in the other constitutional limitations.

a. grant of exemption c. grant of franchise
b. grant of inclusion d. infringement of press freedom

216.It is a constitutional limitation that tax exemption is included in the grant of a franchise
maybe revoked by another law.
a. grant of exemption
b. grant of franchise
c. non-impairment of the Jurisdiction of the SC
d. reserve bills shall originate exclusively from the house of representatives.

217.It is a constitutional limitation which states that no law granting tax exemption shall be
passed without the concurrence of a majority of all members of congress.
a. grant of exemption
b. grant of franchise
c. non-impairment of the Jurisdiction of the SC
d. reserve bills shall originate exclusively from the house of representatives.

218.This constitutional limitation dictates that the congress cannot take away from the SC the
power given to it by the constitution as a final arbiter of the tax.
a. grant of exemption
b. grant of franchise
c. non-impairment of the Jurisdiction of the SC
d. reserve bills shall originate exclusively from the house of representatives.

219.The determination of the situs of taxation depends on various factors, EXCEPT.

a. nature of the tax c. business of the taxpayer
b. of income d. residence of the taxpayer
220.This situs subject of taxation states that situs is the domicile of the owner.
a. lexreisitae
b. situs of tax on real property
c. mobiliasequunturpersonam
d. situs of taxation of intangible personal property.

221.Which of the following is excluded in the determinants of supply.

a. expected future price c. the number of supplies
b. taxes and subsidies d. increase in demand

222.Which is not included factor of income of an individual.

A. Rent b. wage c. tax d. interest

223.Charactirized as the study of how households and firms make decisions and how they
interact in the markets.
A. Macroeconomics C. Ceteris Paribus
B. Microeconomics D. Economitrics

224.It is commonly used This commonly-used phrase stands for 'all other things being
unchanged or constant'. It is used in economics to rule out the possibility of 'other' factors
changing that is the specific causal relation between two variables.
A. Macroeconomics C. Ceteris Paribus
B. Microeconomics D. Economitrics

225.Because resources are scarce and wants are _________ trade-offs are required.
A. Unlimited C. Efficient
B. Economical D. Marginal

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

A. Land C. Capital
B. Labour D. Money

227.Refers to the actual amount received in terms of pesos and or other currencies.
A. Real wage C. Wage
B. Money wage D. Salary

228.The amount of money a worker/ employee recieves in a year.

A. Real wage C. Wage
B. Money wage D. Salary

229.The impact of one person’s actions on the well-being of a bystander.

A. Market failure C. Market power
B. Externality D. Oppurtunity cost

230.It is the ability of a single economic actor to have substancial influence on market prices.
A. Market failure C. Market power
B. Externality D. Oppurtunity cost

231.Charactirize as thing, item and others must be given up to obtain some other item.
A. Market power C. Marginal changes
B. Oppurtunity cost D. Market failure
232.Productivity is charactirized as?
A. The ability of a person to be at help to the society.
B. Measured by the time that a person expend to accomplish a task.
C. The quantity of goods and services produced from each hour of a worker’s time.
D. The quantity of the goods and services that a person cannot produce in a given
period of time.

233.Which of the following is normative?

A. People work harder if the wage is higher.
B. Printing of money causes inflation.
C. The unemplyment rate should be lower.
D. Large government deficits cause an economy to grow more slowly.

234.Which of the following is not part of the oppurtrunity cost if going on holiday?
A. the money you spent on a concert
B. the money you spent on food
C. the money you spent on a theatre show
D. the money you spent on buying your shoes

235.If a nation has a comparative aadvantage in the production of a good,

A. It can benefit by restricting exports of that good.
B. It must be only the country with the ability to produce that good.
C. It can produce that good using fewer resources than its trading partner.
D. It can produce that good at a lowwer opprutunity cost than its trading partner.

236.Which of the following statements about trade is true?

A. People that are skilled at all activities cannot benefit from trade.
B. Unrestricted international trade benefits every person in a country equally.
C. Trade can benefit everyone in society because it allows people to specialize in
activities in which they have a comparative advantage.
D. Trade can benefit everyone in society because it allows people to specialize in
activities in which they have an absolute advantage.

237.According to the principle of comparative advantage,

A. countries should specialize in the production of goods that they enjoy consuming.
B. countries with a comparative advantage in the production of every good need not
specialize.
C. countries should specialize in the production of goods for which they have a lower
opportunity cost of production than their trading partners.
D. countries should specialize in the production of goods for which they use fewer
resources in production than their trading partners.

238.Which of the following statements is TRUE?

A. Self-sufficiency is the road to prosperity for most countries.
B. A self-sufficient country consumes outside its production possibilities frontier.
C. A self-sufficient country can, at best, consume on its production possibilities
frontier.
D. Only countries with an absolute advantage in the production of every good should
strive to be self-sufficient.
239.The figure shows how much a worker can produce in one day. The opportunity cost of 1
unit of mechanic in the Philippines is,
food Mechanics
Philippines 10 2
Japan 20 4
A. 2 units of food C. 5 units of food
B. 4 units of food D. 10 units of food

240.The figyre shows how much a worker can produce in one day. The oppurtunity cost of 1
unit of food in Japan is,
food Mechanics
Philippines 10 2
Japan 20 4
A. 1/5 units of mechanics C. 3/5 units of mechanics
B. 2/5 units of mechanics D. 4/5 units of mechanics

241.A perfectly competitive market has

A. only one seller. C. firms that set their own prices.
B. at least a few sellers. D. many buyers and sellers.

242.If an increase in the price of Jag pants leads to an increase in the demand for columbia
shoes, then Jag pants and colunbia shoes are ?
A. complements C. normal goods
B. inferior goods D. substitutes

243.What happens when the price of goods increase?

A. Increase in the supply of that good.
B. decrease inthe demand for that good.
C. Decrease in the quantity demanded for that good along its demand curve.
D. increase in the quantity supplied of that good along its supply curve.

244.The law of supply states that an increase in the price of a good,

A. increases the supply of that good.
B. decreases the demand for that good.
C. increases the quantity supplied of that good along its supply curve.
D. decreases the quantity demanded for that good along its demand curve.

245.If an increase in consumer incomes leads to a decrease in the demand for computer, then
computer is _____.
A. a normal good C. a substitute good
B. an inferior good D. a complementary good

246.If the price of a good is above the equilibrium price, there is a

A. surplus (i.e. an excess supply) and the price will fall.
B. surplus (i.e. an excess supply) and the price will rise.
C. shortage (i.e. an excess demand) and the price will fall.
D. shortage (i.e. an excess demand) and the price will rise.

247.If the price of a good is below the equilibrium price, there is a _______
A. shortage (i.e. an excess demand) and the price will rise.
B. shortage (i.e. an excess demand) and the price will fall.
C. surplus (i.e. an excess supply) and the price will rise.
D. surplus (i.e. an excess supply) and the price will fall.
248.If the price of a good is equal to the equilibrium price, there is a
A. shortage (i.e. an excess demand) and the price will fall.
B. shortage (i.e. an excess demand) and the price will rise.
C. surplus (i.e. an excess supply) and the price will rise.
D. Equal amount of quantity demanded and quantity supplied and the price remains
unchanged.

249.Suppose both buyers and sellers of rice expect the price of rice to rise in the near future.
What would we expect to happen to the equilibrium price and quantity in the market for rice
today?
A. The impact on both price and quantity is ambiguous.
B. Price will decrease; quantity is ambiguous.
C. Price will increase; quantity will decrease.
D. Price will increase; quantity is ambiguous.

250.An inferior good is one for which an increase in income causes a ___________.
A. decrease in supply C. increase in supply
B. increase in demand D. decrease in demand

251.The price elasticity of demand is defined as _____.

A. The percentage change in the quantity demanded divided by the percentage
change in income.
B. The percentage change in income divided by the percentage change in the quantity
demanded.
C. The percentage change in the quantity demanded of a good divided by the
percentage change in the price of that good.
D. The percentage change in price of a good divided by the percentage change in the
quantity demanded of that good.

252.Which of the following would cause a demand curve for a good to be price inelastic?
A. The good is a luxury.
B. There are a great number of substitutes for the good.
C. The good is a necessity.
D. None of these answers.

253.The demand for which of the following is likely to be the most price inelastic?
A. Transportation C. bus tickets
B. jeep fare D. tricycle fare

254.What happen if a supply curve for the price of a good is elastic?

A. the quantity supplied is sensitive to changes in the price of that good.
B. the quantity demanded is insensitive to changes in the price of that good.
C. the quantity demanded is sensitive to changes in the price of that good.
D. the quantity supplied is insensitive to changes in the price of that good.

255.A decrease in supply (shift to the left) will increase total revenue in that market if _____.
A. demand is price inelastic. C. supply is price inelastic.
B. supply is price elastic. D. demand is price elastic.
256.If consumers think that there are very few substitutes for a good, then
A. supply would tend to be price elastic.
B. demand would tend to be price inelastic.
C. demand would tend to be price elastic.
D. supply would tend to be price inelastic.

257.Which of the following statements about a binding price ceiling is true?

A. The shortage created by the price ceiling is greater in the short run than in the long
run.
B. The surplus created by the price ceiling is greater in the short run than in the long
run.
C. The surplus created by the price ceiling is greater in the long run than in the short
run.
D. The shortage created by the price ceiling is greater in the long run than in the short
run.

258.Which of the following is an example of a price floor?

A. rent controls C. the maximum wage
B. the minimum wage D. All of the above

259.Which of the following statements is true if the government places a price ceiling on rice
₱100 per kilo and the equilibrium price is ₱90 per kilo?
A. There will be a shortage of rice.
B. There will be a surplus of rice.
C. A significant increase in the demand for rice could cause the price ceiling to
become a binding constraint.
D. A significant increase in the supply of rice could cause the price ceiling to become a
binding constraint.

260.Which of the following workers would be most likely to find it more difficult to get a job
after a rise in the minimum wage rate?
A. A teenage worker with few qualifications.
B. A manual worker with fifteen years of work experience.
C. A professional worker with a university degree.
D. All three are equally likely to find it difficult to get a job.

261.When a tax is collected from the buyers in a market,

A. the buyers bear the burden of the tax.
B. the sellers bear the burden of the tax.
C. the tax burden falls most heavily on the buyers.
D. the tax burden on the buyers and sellers is the same as an equivalent tax collected
from the sellers.

262.The burden of a tax falls more heavily on the buyers in a market when?
A. both supply and demand are inelastic.
B. demand is elastic and supply is inelastic.
C. both supply and demand are elastic.
D. demand is inelastic and supply is elastic.
263.Which of the following statements about the burden of a tax is correct?
A. The burden of a tax falls on the side of the market (buyers or sellers) from which it
is collected.
B. The tax burden generated from a tax placed on a good consumers perceive to be a
necessity will fall most heavily on the sellers of the good.
C. The distribution of the burden of a tax is determined by the relative elasticities of
supply and demand and is not determined by legislation.
D. The tax burden falls most heavily on the side of the market (buyers or sellers) that
is most willing to leave the market when price movements are unfavourable to
them.

264.For which of the following products would the burden of a tax likely fall more heavily on
the sellers?
A. Clothing C. Housing
B. Food D. Entertainment

265.It is the increase in the economy’s ability to produce goods and services.
A. Economic freedom C. Price level stability
B. Economic security D. Economic growth

266. It is the heart about individual autonomy, concerned chiefly with the freedom of choice
enjoyed by individuals in acquiring and using economic goods and resources.
A. Economic freedom C. Price level stability
B. Economic security D. Economic growth

267.Which of the following is a characteristics of excludability?

A. Goods that are excludable and rival
B. Goods that not included in the basic needs of an individual
C. The property of a good whereby a person can be prevented from using it.
D. All of the above

268.When marginal costs are below average total costs,

A. average fixed costs are rising. average total costs are
B. average total costs are rising. minimize
C. average total costs are falling.
D. Average total costs are minimized

269.Which of the following is NOTa characteristic of a competitive market?

A. There are many buyers and sellers in the market.
B. The goods offered for sale are largely the same.
C. Firms generate small but positive economic profits in the long run.
D. Firms can freely enter or exit the market.

270.Which of the following markets would most closely satisfy the requirements for a
competitive market?
A. Electricity C. cola
B. cable television D. milk.

271. What do we call the elasticity which percentage change in quantity compared to a
percentage change in price?
A. Price elasticity C. Arc elasticity
B. Elasticity D. Coefficient of elasticity
272.Which of the following is NOTa characteristics of rivalry?
A. Goods that are both excludable and rival.
B. Others cant consume the goods unless the good is not yet used .
C. If one person consuming it ‘uses it up’someone else cannot consume it.
D. The property of a good whereby one person’s used dimished other people’s use.

273.Compared to a perfectly competitive market, a monopoly market will usually generate

____________.
A. higher prices and lower output
B. higher prices and higher output
C. lower prices and lower output
D. lower prices and higher output

274.Which of the following is not part of the group?

A. Private goods C. Public goods
B. Common goods D. Luxury goods

275.It is a good that are neither excluded nor rival.

A. Private goods C. Common goods
B. Public goods D. Goods and services

276.It is a good that are rival but not excluded.

A. Private goods C. Common goods
B. Public goods D. Goods and services

277.Which of the following does NOTdescribe command economy?

A. The government creates a central economic plan.
B. The government allocates all resources according to the central plan.
C. The central plan sets the priorities for the production of all goods and services.
D. None of the above

278.Which of the following is NOT a definition of monopoly?

A. A market structure characterized by a single seller, selling a unique product in the
market.
B. A market structure characterized by many sellers, selling different products in the
market.
C. The seller faces no competition, as he is the sole seller of goods with no close
substitute.
D. Factors like government license, ownership of resources, copyright and patent and
high starting cost make an entity a single seller of goods.

279.What best describe Free market econmomy?

A. It protects private property.
B. it is driven by the motivation of the self-interest of individuals.
C. it allows the free market and the laws of supply and demand to determine prices.
D. The government imposes few or no restrictions and regulations on buyers and
sellers.

280.It’s basically anything that motivates us to do a certain thing or buy a certain product.
A. Incentives C. Interest rates
B. Money supply D. Oppurtunity cost
281. Its an economic concept wherein it is how much we have to pay to use someone else’s
money or how much we earn when we let the bank use our money.
A. Incentives C. Interest rates
B. Money supply D. Oppurtunity cost

282. What BEST describe the following example ? People are likely to make the choice that has
the most benefit to them, with the least cost, or, put another way, the choice that provides
more in benefits than in costs.
A. Demand and supply
B. Costs and benefit
C. Cost and demand
D. Benefit and supply