Republic of the Philippines

Saint Ferdinand College

Cabagan, Isabela

First Periodic Test in Applied Economics

S.Y. 2018-2019

Name: Date:
Grade and Section:

I. MULTIPLE CHOICE
Directions: Read the following questions and encircle the correct answer.
1. Which of the following shows the relationship between the price of a good and the amount of that good that
consumers want at that price?
a. supply curve c. supply schedule
b. demand curve d. production possibilities frontier
2. When the price of good X increases and consumers substitute good Y for good X, we call that the:
a. income effect c. substitution effect.
b. backwards effect d. inferior good
3. When the price of good X increases and consumers demand less of good X because the increase in price has
made them relatively poorer, we call that the:
a. income effect c. substitution effect
b. supply effect d. money multiplier effect
4. If we were to sum the quantity demanded by every consumer in the market at every price and plot those
sums versus the price, we would obtain the:
a. supply curve c. market demand curve
b. summed demand curve d. vertical demand curve
5. Which of the following is not a determinant of demand for good X:
a. average income c. tastes and preferences
b. population d. price of good X
6. The demand curve will shift when____________.
a. the price of the good changes
b. the price of the good changes and when the underlying determinants of demand change
c. the underlying determinants of demand change
d. the price of all goods will increase
7. Which of the following factors will cause the supply curve to shift:
a. Changes in technology c. Changes in the prices of related goods.
b. Changes in input prices d. All of the above
8. Other things held equal, if demand increases, equilibrium price will __________ and equilibrium quantity will
__________. However, if supply increases, equilibrium price will _________ and equilibrium quantity will
__________, other things held equal.
a. decrease; decrease; increase; increase c. decrease; decrease; increase; decrease
b. increase; increase; decrease; increase d. increase; increase; decrease; decrease
9. The forces of demand and supply determine:
a. What to produced c. How the goods are produced
b. For whom the goods are produced d. All of the above
10. Jack loves to drink tea. Later he found out that the price of tea has increased so, he decided to drink coffee.
What this scenario depict?
a. coffee is an inferior good c. coffee is a substitute good
b. coffee is a complementary good d. both a& c
11. It is the study of choice and decision making. It also deals with the production, distribution and consumption
of goods and services.
a. economics b. demand c. supply d. geography
12. It refers to the value of the best foregone alternative. Example, a manager who quits his job in order to take
up a master’s degree.
a. trade off b. opportunity cost c. absolute scarcity d. relative scarcity
13. What happens when there is inflation?
a. inflation causes increases in business expenses such as rent, utilities, and cost of materials used in
production
b. inflation causes decreases in business expenses such as rent, utilities, and cost of materials used in
production
c. inflation never cause in impact in business expenses such as rent, utilities, and cost of materials used
in production
d. inflation is not related in business expenses such as rent, utilities, and cost of materials used in
production
14. The different types of occupation reflect the income earned by individual in the society.
a. True b. False c. Maybe d. It depends
15. When there is high demand for ice cream during summer, what happens to its prices?
a. increases b. decreases c. remains the same d. none of the above
16. it is the most traded commodity in the world.
a. diamond b. oil c. gold d. rice
17. Which of the following is/are true when prices rises?
a. Each peso buys fewer goods and services.
b. Buyers pay more for goods and services
c. sellers receive more than what they sell
d. all of the above
18. It refers to the manner of production or technology that will be used by firms in producing those commodities.
a. What to produce and how much? c. For whom to produce?
b. How to produce? d. who gets what is produced
19. Cynthia plans to open a boutique that sells apparel, footwear, and accessories. What will happen to the
competitiveness of the firms in industry?
a. increase competition c. higher bargaining power of supplier
b. lesser competition d. few sellers will be competing
20. Decisions are based on traditions and practices upheld over the years and passed on from generation to
generation.
a. Traditional Economic System c. Market Economic System
b. Command Economic System d. Mixed economic system
21. In the Law of Supply an increase in price results in____________.
a. Decrease of quantity supplied c. increase in normal goods
b. Increase of quantity supplied d. decrease in normal goods
22. Which of the following is a characteristic of pure monopoly?
a. one seller of the product c. close substitute products
b. low barriers to entry d. perfect information
23. It simply means that as the price of an item goes up, suppliers will attempt to maximize their profits by
increasing the quantity offered for sale.
a. law of supply b. law of demand c. law of diminishing returns d. law of marginal utility
24. It occurs when there is less supply than consumer demand.
a. shortage b. surplus c. price volatility d. inflation
25. Which of the following is the least competitive market structure?
a. Perfect competition c. monopoly
b. Monopolistic competition d. Oligopoly
26. In which form of market structure would price be the key factor when competing?
a. Monopoly c. Monopolistic competition
b. Oligopoly d. Perfect competition
27. It is derived from the Greek word “oligos” meaning “few” and “polein” meaning to sell.
 a. monopoly b. oligopoly c. Monopolistic competition d. Perfect
competition
28. Two goods that are bought and used together is called _______.
a. complementary good b. substitute goods c. normal goods d. inferior goods
29. These are goods that can serve as replacements for one another.
a. complementary good b. substitute goods c. normal goods d. inferior goods
30. A decrease in the price of one results in an increase in demand for other and vice versa.
a. complementary good b. substitute goods c. normal goods d. inferior goods

II. Based from what you have learned about demand and supply illustrate the following situations in graphical form
and explain. (5 points each)
1. Effect of exchange rate between peso and dollar
2. Effect of typhoon in agriculture

III. ESSAY (5 points each)

Criteria
Social Relevance 40%
Mechanics 20%
Organization of ideas 30 %
Cleanliness 10%
100%

1. What do you think is the leading problem that we face in our country? Explain its effect on our
economy.
2. Why economics is considered as an applied science?

Prepared by:

Ms. May-Ann S. Cahilig