Name :

Date :
Assignment no.1
Midterms
Time period and section
I. Which barriers to entry apply in the following instances
a. government franchise
b. patents
c. economies of scale
d. ownership of a scarce factor of
production
_______1. ACCTN, a cable company is given the exclusive privilege of
providing cable television services to the residents of Balibago
_______2. the FDA approves the sale of a newly discovered vaccine for the
A1HI virus
_______3. Maynilad exclusively provides water services to the southern sector
of Manila
_______4. refined sugar can only be profitably marketed by large firms . Small
firms , if they decide to produce refined sugar would not be able to cover
their overhead costs
_______5. The research team came up with a new hybrid that uses electricity
as fuel . Toyota Motors is the first motor company to ever come up with such
a car
_______6. The Aluminum Company of America owned or controlled virtually
70% of the bauxite deposits in the world and until the 1940s monopolized
the production and distribution of Aluminum
_______7. San Miguel jealously guards the secrecy of the ingredients and
processes that makes possible the brewing of a world class beer
_______8.an oil refinery large enough to achieve maximum scale economies
in the production of gasoline would cost well over a billion dollars to build
_______9.many diamond mines in the world are owned by just a single
company-DeBeers
_______10. Although demanding production and overhead does not
necessarily hamper a small firm from competing with larger and more
established firms , the huge cost that advertising brings makes it impossible
for the small firm to compete
11. You are thinking about setting up a lemonade stand . The stand itself
costs $200. The ingredients for each cup of lemonade is $0.50 . What is
your fixed cost ? 2 points
12. What is your variable cost ? 2 points
13. Consider the total cost and total revenue given in the following table .Fill
in the blanks for profit
Quantity

Total cost
Total revenue
Profit

$9

10
$8
___

11
16
___

13
24
___

19
32
___

27
40
___

37
48
___

___

56

14. How much should the firm produce to maximize profit ? 2 points
15. Why do you think in the decades past long distance telephone service
was a natural monopoly ? 2 points

II.For each of the following characteristics or facts , say whether it describes

a:
a. Monopoly
b. Monopolistically competitive firm
c. Oligopoly
d. Perfectly competitive firm
_____16. Marginal revenue is equated with marginal cost
_____17. Oil industry
_____18. Single seller
_____19. Differentiation ( that attracts buyers ) and advertising are a must for
survival
_____20. Price takers
_____21. Collusion is a possibility ( where price fixing happens )
_____22. What PLDT and PAL were once were in the past
_____23. The market for tennis balls
_____24. The consequence of a patent granted by the government
_____25. A national franchise
26. A worker s daily wage is $100 and the firm has fixed costs of $200 . Use
this information to fill in the column for total cost
Complete the following table
Workers
output
marginal

marginal
product

total

average

cost

total

cost
cost
1
______
2
3
4

20
50
90
120

______
______
______
______

_____
_____
_____
_____

_______
_______
_______
_______

______
______
______

II.Put a on those transactions which you think are included in the GDP or
GNP accounts , otherwise , put b
_______1. purchase of a new sewing machine by a seamstress
_______2. Home cooked ham
_______3. You collect P10,000 in a paluwagan scheme in school
_______4. Picked avocados from a home grown tree
_______5. Purchased a used binding machine from a Japanese surplus store to
be employed in your furniture business
_______6. Rewiring of electrical and internet connections in a school
_______7. you spent the week end repainting the veranda of your house
_______8. you withdraw P 5000 from your ATM account
_______9. B Meg builds a P 50 million facility to mill and package harvested
corn and soya beans
_______10. You win P10000 from a poker game at the Angeles Casino
_______11. purchase of a new tricycle by a farmer
_______12. Baked ham cooked at home
_______13. you win P150,000 in a lotto draw
_______14. Dental services
_______15. your university purchased used computers from a computer firm

_______16. you contract the services of a pest control company to rid your
home of termites
_______17. you spend the week end cleaning your room and sometimes the
entire house
_______18. you withdraw P 1000 from your ATM account
_______19. Microsoft builds a $ 50 million facility to develop super computers
and softwares
_______20. your university purchases new computers from Microsoft systems
worth P1 million

III.Matching Type
a.marginal
product

b.normal rate of
return

c.total cost

d.average product

e.profit

f.total fixed costs

i.average total
cost

j.product
differentiation

g.homogeneous
products
k.increasing
returns to scale or
economies of
scale

m. production

n.perfect
competition

o.cartel

p.long run

q. marginal
revenue

r.Oligopoly

s.total revenue

u.natural monopoly

w.marginal cost

x.kinked demand
curve
y.total variable costs

v.

h.monopoly

l.price discrimination

______1.the difference total revenue and total cost

______2.an industry structure in which there are many firms , each small relative to
the industry ; producing identical products in which no firm is large enough to
influence the price and therefore all firms are price takers
______3.additional output that can be produced by adding one more unit of a
specific input
______4. total of all costs that do not change with output even if output is zero
______5.the average amount produced by each unit of a variable factor of production
or total product divided by quantity
______6. total cost divided by the units of output
______7.the increase in total cost that results from producing one more unit of
output
______8.the amount received from the sale of a product ( P x Q )
______9.an industry composed of only one firm that produces a product for which
there are no close substitutes and in which significant barriers exists to prevent new
firms from entering the industry
______10.the process by which inputs are combined , combined and transformed
into outputs
______11.occurs when a firm charges the maximum amount that buyers are willing
to pay for each unit

______12.accomplished by producing products that have distinct positive identities

in consumers minds
______13.a form of industry characterized by a few dominant firms
______14.the total of all costs that vary with output
______15.a group of firm that get together and make joint price and output decisions
to maximize joint profits
______16.an increase in a firms scale of production leads to lower costs per unit of
produced
______17.assumes that competitor firms will follow if a single firm cuts price but will
not follow if a single firm raises its price
______18.an industry that realizes such large economies of scale in producing its
product that single firm production of that good or product is most efficient
______19. a rate of return that is just sufficient to keep owners and investors
satisfied. It should nearly be the same as the rate of return on risk free bonds
______20. players are prevented from cooperating and in which each has a strategy
that leaves them both worse off than if they could cooperate
______21.the period of time in which there are no fixed factors of production
______22. is the total of all accounting costs , the opportunity cost of capital and the
opportunity cost of each input of production . Simply , it is the sum of total variable
cost and total fixed costs
______23.the additional revenue that a firm takes when it increases output by one
additional unit
______24. products that are identical or undistinguishable from each other
______25. Bonus
IV. Identify the market structure referred to in the item
a. Perfect Competition
b. Imperfect Competition
c. Oligopoly
d. Monopoly( natural monopolies included )
Letters only
_____1. Fruit vendors at San Nicolas Public Market , Angeles City
_____2. Texaco , Chevron and Shell who extract and sell oil in the world market
_____3. ACCTN is the only service provider of cable television in Metro Angeles
_____4.RJ guitars are distinct from Lumanog guitars as Lumanog guitars are
distinct from guitars made from Cebu
_____5. A number of second hand or used Principles of Economics textbooks by
Case-Fair are sold on Ebay
_____6. Public Utility Jeepneys that ply the Angeles-Holy-Checkpoint route
_____7. Footwear giants Adidas , Nike and Converse
_____8. Pepsi and Coca Cola giants
_____9. Metro Railway Transit
_____10. Specialty stores that focus on particular clients ( fashion , magazines ,
specialized sportswear , hobbies )
V.

1. A farmer who owns a plot of land sells the right to pump crude oil from his
land to a crude oil producer . The crude oil producer agrees to pay the farmer
70 a barrel for every barrel pumped from the farmers land . During one year
15,000 barrels are pumped
a. the farmer receives a payment of $ ___________from the crude oil producer
b. the value added of the farmer is $ __________
The crude oil producer sells the 15,000 barrels pumped to a petroleum
refiner at a price of $90 per barrel
b. the crude oil farmer receives a payment of $ ________________from the
refiner
c. the value added by the crude oil producer is $ ________________
The refiner employs a pipeline company to transport the crude oil from the
farmers land to the refinery and pays the pipeline company a fee of $ 5 a
barrel for the oil transported

d. the pipeline company receives a payment of $ ________________

e. the value added by the pipeline company is $ __________________
From the 15,000 barrels of oil the refiner produces 525,000 gallons of
gasoline and various by products which are sold to distributors and gasoline
service stations at an average price of $ 4 per gallon . g. the total payment
received by the refiner from its customers is $ _________________ h. the value
added by the refiner is $________________
VI.
_____1. Which factor would tend to increase the budget deficit ?
a. a fall in government expenditures
b. an increase in the size of the government
c. a fall in foreign debt interest payments
an increase in taxes
_____2.Why is inflation sometimes good ?
a. It forces people to make better choices
b. It improves the qualities of goods
c.Salaries are automatically adjusted therearfter
_____3.The devaluation of the peso would _______
a.Decrease exports
c. increase exports
b. increase imports
_____4.In evaluating government expenditures which should gain more
weight ?:
a. the popularity of the incumbent official
b. outputs
c. inputs
_____5. A devaluation might be inflationary because of :
a. climate change
b. increase in the prices of petroleum products
c. automatic increase in interest rates
_____6.Although the growth of the GNP is an important yardstick so its ____
a. distribution
c. its compositon
b. both a and c
_____7. Though historically the price of energy has continued to rise , the
demand for cars has continued to increase as well . Why is this so ?
a. the relative price of the fuels compared to other products has fallen
through the years
b. people are uneconomically unaware that this is so
c. both a and b
_____8.. What would basically make a company competitive ?
a. cost savings
b. being featuristic ( their items may contain many features)
c. being unique
_____9.Why do you think electric cars , solar panels , wind turbines are not
yet a hit ( or popular ) among governments and consumers :
a. prices of fuels have not risen high enough to make the adoption of such
energies viable or practical
b. governments and peoples are plain lazy to even try them
c. their selling prices must first increase
_____10.What reason is there why Real values are important ( example
Real GDP)
a. values can be deflated by higher prices
c. values can be inflated by
higher prices
b. values can be inflated by lower prices
_____11. What reason is there why a value added method is adopted in GNP
accounting ?

a. to prevent double counting and to prevent overvaluing a good

b. for auditing purposes
c. no answer can be chosen
______12.It is the ratio of GNP and the number of the population ?
a. Real GNP
b. Per capita GNP
c. Gross Domestic product
d. National Income
______13.GNP minus GDP equals ?
a. Remittances
b. Foreign debt
c. Net factor income earned abroad
d. Circular flow of income
______14.An economic measure of a negative balance of trade in which a
country's imports exceeds its exports.It represents an outflow of domestic currency to
foreign markets :
a. Import export balances
c. devaluation
b. Trade deficit
d. value added