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ECO101 – Final Examination


Examination Guidelines: Shade the letter of your answer in the answering sheet provided, you can use the other
examination papers provided for draft answers. Shaded letters in the answer sheet will be your final answer. Use
ballpen/markers in shading. NO CHEATING. NO ERASURES.

1. A visual model of the economy that shows how dollars flow through markets among household and firms
a. Circular-Flow Diagram
b. Production Possibilities Frontier
c. Supply and Demand Curve
d. Equilibrium Graphs
e. Both A and B
2. Type of input where firms produce goods and services
a. Factors of production
b. Production Materials
c. Production Markets
d. Raw Materials
e. None of the Above
3. Shows the opportunity cost of one good measured in terms of the other good.
a. Circular-Flow Diagram
b. Production Possibilities Frontier
c. Supply and Demand Curve
d. Equilibrium Graphs
e. Both A and B
4. It is the study of how societies produce and distribute goods in an attempt to satisfy the wants and needs of its
members.
a. Equality
b. Economics
c. Efficiency
d. Marketplace
e. None of the Above
5. It allows people to specialize in activities in which they have a comparative advantage
a. Independence
b. Interdependence
c. Trade
d. Production Possibilities
e. None of the Above
6. A market in which there are many buyers and sellers so that each has a negligible impact on the market price
a. Competitive Market
b. Perfect Competition
c. Oligopoly
d. Monopoly
e. Both B and C
7. Occurs because people are better off when they specialize and trade with others.
a. Trading
b. Independence
c. Interdependence
d. Absolute Advantage
e. Comparative Advantage
8. Describes the productivity of one person, firm, or nation compared to that of another
a. Comparative Advantage
b. Absolute Advantage
c. Interdependence
d. Trading
e. Independence
9. The producer who has the smaller opportunity cost of producing a good is said to have this in producing that
good
a. Interdependence
b. Comparative Advantage
c. Trading
d. Independence
e. Absolute Advantage
10. Refers to a situation in which the price has reached the level where quantity supplied equals quantity demanded
a. Equilibrium
b. Equality
c. Surplus
d. Shortage
e. None of the Above
11. It is the price at which the supply and demand curves intersect
a. Equilibrium Quantity
b. Equilibrium
c. Equilibrium Price
d. Market Equilibrium
e. Either C or D
12. The quantity supplied and the quantity demanded at the equilibrium price
a. Equilibrium
b. Equilibrium Price
c. Market Equilibrium
d. Equilibrium Quantity
e. Either B or C
13. It is determined by the intersection of the supply and demand curves.
a. Equilibrium Quantity
b. Equilibrium
c. Market Equilibrium
d. Equilibrium Price
e. None of the Above
14. It discourages market activity
a. Inflation
b. Tax
c. Income
d. Supply
e. None of the above
15. It is an increase in the overall level of prices in the economy
a. Recession
b. Economic Growth
c. Deflation
d. Inflation
e. None of the Above
16. If the percentage change in quantity demanded is 50% and the percentage change in price is 25%, what will be
the price elasticity of demand
a. 75
b. -25
c. 25
d. 1.5
e. 2
17. Type of market where the household are buyers and firms are sellers
a. Markets for Factors of Production
b. Decentralized Market
c. Markets for Goods and Services
d. Marketplace
e. None of the above
18. A measure of the responsiveness of quantity demanded or quantity supplied to a change in one of its
determinants
a. Purchasing power
b. Income
c. Market Activity
d. Elasticity
e. None of the Above
19. The ability of an individual to own and exercise control over scarce resources
a. Property Rights
b. Efficiency
c. Equality
d. Market Power
e. None of the Above
20. Using midpoint method, what will be the price elasticity of demand if the base quantity goes from 1200 to 800
and its price will go from Php 40.00 to Php 60.00?
a. -2
b. -1
c. 0
d. 1
e. 2
21. They can exploit the short-run trade-off between inflation and unemployment using various policy instruments.
a. Economists
b. Government
c. Rational People
d. Policymakers
e. Both B and C
22. The amount paid by buyers and received by sellers of a good.
a. Money
b. Price of the Good
c. Payment
d. Total revenue
e. All of the Above
23. In this type of economy, the decisions of a central planner are replaced by the decisions of millions of firms and
households.
a. Perfect Economy
b. Market Economy
c. Decentralized Economy
d. Fluctuating Economy
e. None of the Above
24. If the percentage change in quantity demanded is 50% and the percentage change in price is 25%, what will be
the price elasticity of supply
a. 2
b. -2
c. 1
d. -1
e. None of the above
25. The dispassionate development and testing of theories on how the world works
a. Scientific Thinking
b. Theoretical Thinking
c. Scientific Experimentation
d. Scientific Method
e. None of the Above
26. Measures how the quantity demanded changes as consumer income changes.
a. Market Activity
b. Purchasing Power
c. Income elasticity of demand
d. Shortage
e. None of the Above
27. These are key to analyzing how markets work.
a. Economists
b. Policies
c. Incentives
d. Government
e. Both C and D
28. What will be the price elasticity of supply if the price goes from Php 4.00 to Php 5.00 and the quantity is
contantly on 100?
a. Perfectly Inelastic Supply
b. Inelastic Supply
c. Unit elastic Supply
d. Elastic Supply
e. Perfecly Elastic Supply
29. When a fall in the price of one good reduces the demand for another good, the two goods are called
_____________
a. Surplus
b. Shortage
c. Substitutes
d. Supplies
e. None of the Above
30. OPEC stands for:
a. Organization of Pakopyaan Examination Classmates
b. Organization of Petroleum Exporting Committee
c. Organization of the Petroleum Exporting Countries
d. Organization of the Philippine Exporting Companies
e. None of the Above
31. States that, other things equal, the quantity supplied of a good rises when the price of the good rises
a. Law of Demand
b. Law of Supply
c. Demand and Supply Curve
d. Equilibrium
e. None of the Above
32. What will be the price elasticity of supply if the price goes from Php 4.00 to Php 5.00 and the quantity goes from
100 to 125?
a. Perfectly Inelastic Supply
b. Inelastic Supply
c. Unit elastic Supply
d. Elastic Supply
e. Perfecly Elastic Supply
33. It is the quantity of goods and services produced by each unit of labor input
a. Production
b. Supply
c. Productivity
d. Produced Supplies
e. Either C or D
34. What is most likely the reason why the price of illegal drug decreases while price of rice products increases in
the Philippines?
a. High amount of supply on drugs, high demand on rice products
b. High demand on rice products, shortage of drug users
c. Lower demand on drugs, Shortage on rice products
d. Surplus on drugs, hoarding of rice products
e. None of the above
35. Fluctuations in economic activity, such as employment and production
a. Production Curve
b. Business cycle
c. Business Curve
d. Market Demands
e. None of the Above
36. The price of a good rises from Php 8.00 to Php 12.00 and the quantity demanded falls from 110 to 90 units.
Calculated with the midpoint method, the price elasticity of demand is:
a. -.5
b. -.2
c. 0
d. .2
e. .5
37. The art of deciding what assumptions to make
a. Theoretical Thinking
b. Scientific Experimentation
c. Scientific thinking
d. Scientific Method
e. None of the Above
38. If buyer A has willingness to pay of Php 100, buyer B has a willingness to pay Php 80, and buyer C has a
willingness to pay Php 70 for a good, what will be the total consumer surplus?
a. Php 40
b. Php 20
c. Php 10
d. Php 150
e. Php 250
39. It is where prices and self-interest guide their decisions.
a. Economy
b. Policies
c. Marketplace
d. Supply and Demand Curves
e. Both C and D
40. Tax on the wages that firms pay their workers
a. Personal income Tax
b. Payroll Tax
c. Government Tax
d. 3rd Party Payer Taxes
e. None of the above
41. It is an economy that allocates resources through the decentralized decisions of many firms and households as
they interact in markets for goods and services
a. Decentralized Economy
b. Market Economy
c. Positive Economy
d. Perfect Economy
e. All of the Above
42. Binding price floor causes a:
a. Shortage
b. Surplus
c. No effect
43. In this competition, Products are the same
a. Oligopoly
b. Monopoly
c. Perfect competition
d. Competitive Market
e. Both B and D
44. Binding price ceiling causes a:
a. Shortage
b. Surplus
c. No effect
45. The ability of a single person or firm to unduly influence market prices.
a. Market Power
b. Market Influence
c. Economic Influence
d. Economic Power
e. None of the Above
46. The manner in which the burden of tax is shared.
a. Tax incidents
b. Tax incidence
c. Tax resident
d. Tax income
e. None of the above
47. A situation in which a market left on its own fails to allocate resources
a. Recession
b. Inflation
c. Market failure
d. Production Failure
e. None of the Above
48. When a good is taxed, the quantity of the good sold is ____________ in the new equilibrium
a. Slightly smaller
b. Smaller
c. Constant
d. Larger
e. Slightly Larger
49. The ability of a single economic actor to have a substantial influence on market prices
a. Externality
b. Market Power
c. Market Influence
d. Economic Influence
e. None of the Above
50. Which of the following is true?
a. Buyers pay less for a good, and sellers pay more because of taxes
b. Buyers receive less of the a good, and sellers receive more because of taxes
c. Buyers pay more for the good, and sellers receive less because of taxes
d. Buyers pay less for a good, and sellers receive more because of taxes
e. Buyers pay less for a good, and sellers pay less because of taxes
51. Refers to the sum of all individual demands for a particular good or service
a. Aggregate Demand
b. Demand Curve
c. Market Demand
d. Demand Schedule
e. None of the Above
52. The maximum amount that a buyer will pay for a good.
a. Purchasing power
b. Income elasticity
c. Willingness to pay
d. Opportunity cost
e. None of the Above
53. The property of distributing economic prosperity uniformly among the members of the society
a. Equilibrium
b. Efficiency
c. Economic Influence
d. Equality
e. All of the Above
54. If buyer A has willingness to pay of Php 100 and buyer B has a willingness to pay Php 80 for a good, what will be
the consumer surplus of buyer A.
a. Php 20
b. -Php 20
c. Php 180
d. Php 0
e. None of the above
55. These are adjustments around the edges of what you are doing.
a. Marginal change
b. Supply Curve
c. Demand Curve
d. Production Possibilities Frontier
e. None of the Above
56. If buyer A has willingness to pay of Php 100, buyer B has a willingness to pay Php 80, and buyer C has a
willingness to pay Php 70 for a good, what will be the consumer surplus of buyer B.
a. Php 10
b. Php 20
c. Php 30
d. Php 150
e. Php 250
57. The impact of one person’s actions on the well-being of a bystander
a. Market Influence
b. Externality
c. Market Power
d. Economic Influence
e. Equality
58. Measures the benefit sellers received from participating in a market.
a. Consumer Surplus
b. Producer Surplus
c. Goods Surplus
d. Total Surplus
e. Total Revenue
59. People who systematically and purposefully do the best they can to achieve their objectives
a. Rational people
b. Policymakers
c. Economists
d. Monopolists
e. All of the Above
60. The fall in total surplus that results from a market distortion, such as tax
a. Shortage
b. Surplus of Goods
c. Loss of buyers
d. Deadweight loss
e. None of the Above
61. Takes an action if and only if the marginal benefit of the action exceeds the marginal costs
a. Rational Decision Maker
b. Economists
c. Policymakers
d. Oligopolists
e. Monopolists
62. The greater the elasticities of supply and demand, the _____________ the deadweight loss of a tax
a. Smaller
b. Greater
63. Can simplify the complex world and make it easier to understand
a. Assumption
b. Scientific Method
c. Scientific Thinking
d. Theoretical Thinking
e. Scientific Experimentation
64. In this competition, there is only one seller, and seller controls price
a. Competitive Market
b. Oligopoly
c. Perfect Competition
d. Monopoly
e. Both B and D
65. In this competition, there is only one buyer and many seller
a. Monopsonomy
b. Monopoly
c. Monopsony
d. Monoposony
e. Monolopsony
66. states that, other things equal, the quantity demanded of a good falls when the price of the good rises.
a. Law of Demand
b. Law of Supply
c. Demand Schedule
d. Demand Curve
e. Equilibrium
67. It is a table that shows the relationship between the price of the good and the quantity demanded.
a. Demand Curve
b. Equilibrium
c. Supply Schedule
d. Demand Schedule
e. Supply Curve
68. A graph of the relationship between the price of a good and the quantity demanded
a. Demand Schedule
b. Demand Curve
c. Equilibrium
d. Supply Schedule
e. Supply Curve
69. The property of society getting the most it can from its scarce resources
a. Equality
b. Equilibrium
c. Efficiency
d. Economic Influence
e. All of the Above
70. The principle wherein it tells us that “There is no such thing as a free lunch”
a. The Cost of something is what you give up to get it
b. Trade Can make everyone better off
c. Rational People think at the Margin
d. People Face Trade-offs
e. None of the Above
71. Something that induces a person to ac t
a. Economic Fluctuations
b. Incentive
c. Market Power
d. Marginal Decision Making
e. None of the Above
72. Can help explain some puzzling economic phenomena in the decision making of people
a. Decision Making
b. Economic Fluctuations
c. Marginal Decision Making
d. Supply/Demand Curves
e. Equilibrium
73. Type of market where the firms are buyers and household are sellers
a. Markets for goods and services
b. Markets for Factors of production
c. Decentralized Market
d. Marketplace
e. None of the above
74. These are the basis for specialized production and trade
a. Absolute Advantage and differences in opportunity costs
b. Trading and Production Speed
c. Comparative advantage and differences in opportunity costs
d. Raw Materials and Production Speed
e. Marketplace Status
75. It is a graph that shows the combinations of output that the economy can possibly produce given the available
factors of production and the available production technology.
a. Circular-Flow Diagram
b. Production Possibilities Frontier
c. Supply and Demand Curve
d. Equilibrium Graphs
e. Both A and B