PAMANTASAN NG LUNGSOD NG MAYNILA

College of Accountancy and Economics

MICROECONOMICS

NAME: _______________________________________________ Section: ________________ Date: __________ Score:

______________________
MULTIPLE-CHOICE QUESTIONS: Write the letter of the best answer on the space provided before each number. Use
CAPITAL letters.

1. The word that is central to the definition of economics is: A. More health care services and less other products will
A. resource B. scarcity C. wants D. be produced.
capital B. Environment will be cleaner at the same time as
2. We would not need to economize if ___________. medical services will be improved.
A. The government printed more money C. Less health care services and even of other products will
B. There was no scarcity be produced.
C. There was less output of goods and services D. Environment will be cleaner but medical services will be
D. Everyone received a big pay increase decreased.
3. What basic concepts are illustrated by the production 13. It is defined as the set of various quantities of
possibility frontier: commodities which buyers are willing and able to
A. Choice, opportunity costs, and prices. purchase at a given price, place and time.
B. Opportunity costs, fair distribution, and full A. Demand B. Supply C. Equilibrium D. Price
employment 14. It refers to the set of quantities sellers would offer for
C. Scarcity, choice, and opportunity costs sale at various prices during a specified period of time.
D. Medical services and, clean environment A. Demand B. Supply C. Equilibrium D. Price
4. The initial analysis of the production possibility frontier is 15. Which of the following is /are consistent with the law of
based on the ff. assumptions EXCEPT: demand?
A. Given amount of resources. A. As the price of a good rises, the quantity demanded of
B. Full employment of all resources. the good falls.
B. As the price of a good falls, the quantity demanded of
C. Population is constantly increasing.
the good falls.
D. Fixed technology.
C. As the price of a good rises, the quantity demanded of
5. It refers to the value of the good or service forgone: the good rises.
A. Accounting costs C. Historical Costs D. Both B and C.
B. Opportunity costs D. Mark Up Costs 16. Which of the following is / are consistent with the law of
6. Which of the following is an example of opportunity supply?
costs: A. As the price of a good rises, the quantity supplied of the
A. Quantity of medical services not produced because of good falls.
high prices. B. As the price of a good falls, the quantity supplied of the
B. Quantity of economic resources that need to be good falls.
employed in the production of medical services. C. As the price of a good rises, the quantity supplied of the
C. Quantity of economic growth that does not occur due to good rises.
scarce resources. D. Both B and C.
D. The quantity of food and durable goods an economy 17. Why does quantity demanded go down as price goes up?
must go without in order to produce more medical A. Because people substitute lower-priced goods for
services. higher-priced goods as price rises.
7. Productive efficiency occurs when: B. For a given time period, the marginal utility gained in
A. Production of one good cannot be increased without consuming equal successive units of a good will decline
curtailing production of another good. as the amount consumed increases.
B. Distributing output in a manner that result in the C. Because as price increases, profit also rises, this induces
desired outcome. producers to supply a large quantity.
C. Distributing output in a way that its use has appropriate D. Both A and B.
benefits. 18. Why does quantity supplied go up as price goes up?
D. Production of out good is possible without producing A. Because people substitute lower-priced goods for
less of another. higher-priced goods as price rises.
Refer to the figure 1 below for numbers 8-12. B. For a given time period, the marginal utility gained in
8. At which point consuming equal successive units of a good will decline
in the PPF is a as the amount consumed increases.
C. Because as price increases, profit also rises, this induces
situation
producers to supply a large quantity.
wherein D. Both A and B.
resources of 19. Human wants are _____________.
the economy A. Relatively limited C. Relatively
are unlimited
underutilized B. Easily satisfied D. equal to productive
or idle. capacity
A. Point A 20. The following are examples of capital EXCEPT:
B. Point F A. A farm C. a computer system
C. Point H B. An office building D. a factory
D. Point G 21. The opportunity cost of spending four hours studying a
9. At which point review book the night before a final exam would be___.
in the figure is A. The cost of the review book C. Missing four
a situation hours of TV
where in there is no available medical services: B. A higher grade on the exam D. knowledge
A. Point A B. Point F C. Point H gained
D. Point G 22. We have a mixed economy because _________.
10. At which point in the figure is a situation that is outside A. We produce guns and butters
the feasibility region or that is outside the productive B. We consumed domestically produced goods as well
capacity of the economy: as imports
A. Point G B. Point B C. Point H C. we consume both goods and services
D. Point E D. there is a private sector and a public sector
11. If the economy moves from point H to point C, which of 23. Which does not fit with the others?
the following situation is held true: A. Competition
A. More health care services and less other products will B. government planning and regulation
be produced.
C. the invisible hand
B. Environment will be cleaner at the same time as
D. the price mechanism
medical services will be improved.
24. Adam Smith believe the best way to promote the public
C. Less health care services and more of other products
will be produced.
interest was to____ ________.
D. Environment will be cleaner but medical services will be
A. have a government produce most goods and
decreased. services
12. If the economy moves from point B to point C, which of B. let people pursue their own selfish interest
the following situation is held true: C. wait for the individuals to set out to promote the
public interest
 D. get rid of the price mechanism A. Benefits C. Consumption
25. Wages, rents, interest, and profits flow from _____.
A. business firms to household B. Utility D. Efficiency
B. households to business firms 42. When total utility is maximized, which of the following is
C. business firms to government true concerning marginal utility:
D. the government to business firms A. Marginal utility is minimized.
26. When supply rises and demand stays the same,____. B. Marginal utility equals zero.
A. equilibrium quantity rises C. Marginal utility is equal to total utility
B. equilibrium quantity falls D. Marginal utility is also maximized.
C. equilibrium quantity stays the same 43. It consists of durable produced goods that are in turn
D. Cannot be determined used in production which includes equipment, structures
27. At equilibrium price, quantity demanded is _______. and inventory.
A. greater than quantity supplied C. equal to
quantity supplied A. Land B. Labor C. Capital D.
B. smaller than quantity supplied D. Cannot be Wage
determined 44. If Laizzes Faire is to Invisible Hand;
28. What happens to quantity supplied when price is Then __________ is to government intervention.
lowered? A. Free Economy C. Command Economy
A. It rises. C. It falls. B. Mixed Economy D. Communism
B. It stays the same. D. Undetermined Refer to the table 1 below for nos. 45-47.
29. What happens to quantity demanded when price is 45. Total utility derived from
raised? consuming three ice Table 1. Utility Schedule
A. It rises. C. It falls. cream cones equals:
B. It stays the same. D. Undetermined A. 6 C. 24
30. When market price is above equilibrium price, ____. B. 34 D. 22
A. market price will rise C. equilibrium 46. What is the marginal utility of consuming a second cone
price will rise of ice cream:
B. market price will fall D. equilibrium A. 10 C. 8
price will fall B. 6 D. 2
31. At equilibrium, quantity demanded is ___________ equal to 47. What is the total utility of consuming the fifth cone of ice
quantity supplied. cream?
A. 28 B. 32 C. 30 D. 34
A. Sometimes B. always C. Never D.
48. This refers to the graph of a bowl-shaped line showing
Undetermined different bundles of goods, each measured as to
32. When quantity demanded is greater than quantity quantity, to which a consumer in different.
supplied, there___. A. PPF C. Indifference curve
A. Is a shortage B. Budget line D. Transformation curve
B. Is a surplus 49. What is a budget constraint?
C. May be either a shortage or a surplus Figure 2. Indifference
A. The amount of Curve
D. May be neither a shortage nor a surplus money necessary to
33. These are goods that respond greatly to changes in purchase a given
price. combination of
A. Elastic goods C. Unitary elastic goods goods.
B. Inelastic goods D. Perfectly elastic goods B. An amount of
34. These are goods that respond little to changes in price. income that yields
A. Elastic goods C. Unitary elastic goods equal marginal
B. Inelastic goods D. Perfectly utility per unit
elastic goods spent.
35. When the coefficient of elasticity or ED is equals to 1 C. A limited amount of
then the good is: income available to
consumers to spend
A. Elastic goods C. Unitary elastic goods
on goods and
B. Inelastic goods D. Perfectly services.
elastic goods D. The amount of
36. This kind of elasticity means that even though there is no income that must
change in price, there is unlimited possible change in be spent on goods
quantity. Graphically, it is expressed through a horizontal and services in
line. order to maximize utility for consumption.
A. Elastic goods C. Unitary elastic goods Refer to the figure 2 beside to answer nos. 50-51.
B. Inelastic goods Ice Total Margin 50. Which of the following is true:
D. Cream Utili al A. Point B and Point F has the same level of utility
Perfectly elastic Cones ty Utility B. 45 units of clothing and 4 units of food provides the
goods same level of utility with 15 units of clothing and 12
1 10 ?
Situation for nos. 37- units of food
38: If the consumer had a 2 18 ?
C. Both A and B
50% increment in his 3 ? 6 D. None of the Above
income which lead to a 4 28 ? 51. MRS= change in quantity of Good Y
25% decline in his 5 ? 2 change in the quantity of Goof X
consumption of good x. The marginal rate of substitution of food in terms of
37. What will be his coefficient of income elasticity? clothing when moving from point A to point B:
A. -2.0 B. -0.5 C. zero D. A. 7.5 units B. 3.25 units C. 1.33 units
undefined
D. 1 unit
38. Good x is therefore:
Refer to the figure 3 beside to answer nos. 52-53.
A. Inelastic & normal good C. Elastic & normal good
52. When trying to maximize
B. Inelastic & inferior good D. Elastic & inferior good
utility subject to a budget Figure 3. Indifference
Situation for nos. 39-40: Glendas quantity demanded for
constraint, the consumer Curve with Budget Line
pancakes is at 10 pcs. per month if the price is at 30 each. If
would choose?
the price increases to 40 each, then Glenda will only
A. Either point e or
purchase 9 pcs. per month.
point j only.
39. What is Glendas coefficient of price elasticity for
B. point e only.
pancakes?
C. Any one of points
A. 0.37 B. -0.37 C. -3.7 D.
k, e or j.
3.7
D. Point k only.
40. Which of the following statements then are true?
53. Which point provides
A. Glenda has a relatively elastic demand for pancakes
the highest level of
B. Glenda has a relatively inelastic demand for
utility with no
pancakes
constraint?
C. Glenda treats pancakes as an inferior good
A. Point j only
D. Glenda belongs to the leisure class
B. Point k only
E. Both B and C
C. Point e only
41. It is a concept that can be linked to fulfilling ones
D. any point in the
satisfaction.
graph
Refer to the figure 4 below to for nos. 54-56.
Figure 4. Budget Line
 54. Compute for the budget
required to consume on
the budget line above if
the price of tacos is at 10
and burgers at 30:
A. 3000 C. 300
B. 1000 D.
100
55. If the price of burgers
increases to 35 each, the
budget line is expected to:
A. Shift inward
B. C. Pivot inward
C. Shift outward D. Pivot outward
56. Which of the following will lead for the budget line to
shift outward to the right?
A. Increase in the price of both tacos and burgers
B. Decrease in the price of both tacos and burgers
C. Increase in the total budget for tacos and burgers
D. Decrease in the total budget for tacos and burgers
E. Both A and B
F. Both B and C
Refer to the table 2 answer nos. 57-60.
Table 2. Demand Schedule for Good X.
Price of Qd
Good X for MU TU CS
Good X
140 1 units
130 2 units
120 3 units
110 4 units
100 5 units
57. What is the marginal utility at the consumption of 5 units
of Good X.
A. 10 B. 20 C. 5 D. 2 E. 100
58. What is the total utility at the consumption of 4 units of
Good X.
A. 600 B. 500 C. 400 D. 100 E. 440
59. What is the consumer surplus at the consumption of 3
units of Good X.
A. 0 B. -30 C. 30 D. 360 E. -360
60. What is the consumer surplus at the consumption of 5
units of Good X.
B. 0 B. 10 C. 30 D. 60 E. 100

Theres no such thing as a free lunch.

Milton Friedman,
Nobel Prize Laureate, 1976
Everything is earned only with a trade-off.
Mang Pandoy,
2013

PREPARED BY: R.A. LIWANAG

AUGUST 19, 2013