Agricultural Economics and Marketing (Pre-Test)

1. He predicts the ultimate collapse of the capitalist system which influences the Bolshevik Revolution:

a. Adam Smith

b. Alfred Marshall

c. David Ricardo

d. Karl Max

2. His book “General Theory of Employment, Interest, and Money” revolutionized economic theory by showing how

unemployment could occur involuntarily and how governments should engage in deficit spending to make up for the

economic slowdowns caused when business reduce their investments.

a. Freidrich Engels

b. Leon Walras

c. John Maynard Keynes

d. Karl Max

3. His plans with Harry Dexter White during World War II for post-war international economic institutions and

policies contributed to the creation of Bretton Woods of the international Monetary Fund and the World Bank, and

later to the creation of the General Agreement on Tariffs and Trade and eventually the World Trade Organization.

a. Adam Smith

b. David Ricardo

c. John Maynard Keynes

d. Karl Max

4. What are the 4 C’s of Marketing mix?

A. Cost, Costumer, Consumer, Communication

B. Cost, Communication, Consumer, Convenience

C. Communication, Consumer, Costing, Calligraphy

D. Communication, Costing, Calligraphy, Creativity

5. Economists would be willing to say that price discrimination is more efficient than single-price monopoly pricing

if it results in:

A. higher total revenue for the firm.

B. an increase in net benefit for society.

C. the producer capturing some of the consumer's surplus.

D. some consumers paying a lower price than they would under a single-price monopoly.

E. all of the above.

6. Marginal utility:

A. is the change in total utility caused by the consumption of an addition unit of a good.

B. is equal to total utility divided by total consumption.

C. always decreases as consumption increases.

D. is never negative.

E. all of the above.

7. Which of the following seems a contradiction to the law of diminishing marginal utility?

A. Ken enjoys his 30th beer of the evening more than his first.

B. Joan finds that the effort associated with preparing for a date exceeds the enjoyment gained.

C. Howard has a decreasing desire for more wealth the richer he becomes.

D. Natasha must work increasingly hard to cast extra steel ingots as she attempts to exceed her production quota.

E. Morris the cat likes catnip more than canned tuna, and canned tuna more than dry cat food.

8. According to the law of diminishing marginal utility:

A. marginal utility always falls with the extra consumption of a good.

B. a consumer inevitably reaches a point where the additional satisfaction from consuming each additional unit of a

good rises.

C. a consumer inevitably reaches a point where he or she decreasingly values additional units of a good.

D. utility is easily measured by dollar values.

E. none of the above.

9. When a household is allocating its expenditure among commodity A and all other commodities so as to maximize

total utility, then a decrease in the price of commodity A will lead the household to buy more of commodity A:

A. so that the marginal utility of a unit of commodity A will increase.

B. because a dollar spent on commodity A will now yield less utility than before the decrease in price.

C. because a dollar spent on another commodity would now yield more utility if spent on commodity A.

D. because the marginal utility of a unit of commodity A has increased.

10. The cross-price elasticity of Commodity A and Commodity B is – 1.50, therefore the commodities are:

A. Compliments

B. Substitutes

C. Necessities

D. Luxuries

11. To say that the demand curve for movies is downward sloping to the right means that:

A. less will be demanded at lower prices.

B. more will be demanded as color TV sets become more expensive.

C. less will be demanded at higher prices.

D. less will be demanded if movies become poorer in quality.

12. Which of the following will NOT, all else equal, cause demand for Coffee to change?

A. a change in the price of coffee.

B. a change in the price of creamier, a complement.

C. a change in the price of tea, a substitute.

D. an increase in average income.

13. . A fall in the price of raw milk, used in the production of ice cream, will:

A. decrease the supply of ice cream, causing the supply curve of ice cream to shift to the left.

B. increase the supply of ice cream, causing the supply curve of ice cream to shift to the right.

C. have no effect on the supply of ice cream at all.

D. have no effect on the supply curve of ice cream, but will cause a downward movement along the supply curve of

ice cream.
14. An increase in the price of cheese, all else equal, is likely to have all of the following effects except a:

A. decrease in the quantity demanded of cheese.

B. decrease in the supply of pizza.

C. increase in demand for peanut butter (a substitute good).

D. decrease in the demand for apple pie (a complimentary good).

E. all of the above will occur.

15. A fall in the price of raw milk, used in the production of ice cream, will:

A. decrease the supply of ice cream.

B. increase the quantity supplied of ice cream.

C. have no effect on the supply of ice cream.

D. decrease the price while increasing the quantity demanded of ice cream.

E. none of the above.

16. Suppose it is observed that initially increases in income cause consumption of hamburger to rise but that as

income continues to rise, consumption of hamburger begins to decline. This would imply that hamburger:

A. is a normal good.

B. is an inferior good.

C. is a normal good at low income levels but an inferior good at high income levels.

D. is an inferior good at low income levels but a normal good at high income levels.

17. The quantity of a good demanded rises from 1000 to 1500 units when the price falls from Php1.50 to Php1.00

per unit. The price elasticity of demand for this product is approximately:

A. 1.0

B. 16

C. 2.5

D. 4.0

18. This marketing function addresses the problem on product seasonality. The primary aim is to help balance

consumption or periods of scarcity

A. Processing

B. Storage
C. Pooling

D. Packaging

19. Demand is said to be inelastic when:

A. the percentage change in quantity demanded is greater than the percentage change in price of a good

B. in a linear demand curve, quantity demanded is close to zero (given the price) so that the percentage change in

quantity demanded will be very high

C. the percentage change in price exceeds the percentage change in quantity demanded of a good

D. a relatively small change in price results in a relatively big change in quantity demanded

20. Suppose that the Board of Directors of the local symphony proposes that the admission price to hear the

orchestra be raised as a means of raising additional funds to support music programs. Its members are implicitly

assuming that the price elasticity of demand for a ticket is:

A. less than unity

B. greater than unity

C. unity

D. it really says nothing about price elasticity

21. The determinants of the price elasticity of demand of a particular commodity include all of the following except:

A. the availability of substitutes for the commodity

B. the time period involved

C. the ease with which resources can be shifted to and from the production of this commodity to other uses

D. the degree of specificity with which the commodity is defined

22. The fact that the expenditure on food has declined as income has increased indicates that food:

A. is an inferior good

B. is a luxury good

C. has an income elasticity of demand less than unity

D. is a normal good with an elastic demand

23. The quantity of a good demanded rises from 90 units to 110 units when the price falls from Php1.20 to Php.80

per unit. The price elasticity of demand for this product approximates:

A. .5

B. 1.0

C. 2.0

D. 4.0

24. Consumers will bear more of the burden of a tax the:

A. more elastic supply is.

B. more elastic demand is.

C. the more inelastic supply is.

D. consumers always bear the burden of the tax since they pay the final price.

E. none of the above.

25. A downward movement along a given demand curve is a result of:

A. An increase in the price of the good

B. An increase in the income of the consumers

C. A decrease in the income of consumers

D. A decrease in the price of the good

26. This is the utility created when raw materials are transformed into products

A. Place

B. Time

C. Form

D. Possession

27. A trade quota:

A. is an explicit limit on the amount of exports of a good from a country.

B. is an explicit limit on the amount of imports of a good into a country.

C. is a tax only on exports.

D. is a tax only on imports.

28. While an import tariff on a good will both raise the domestic price of that good and its domestic production

levels, a quota:

A. will not raise the domestic price but will increase the amount of the good produced domestically.

B. will raise the domestic price but will not increase the amount of the good produced domestically.

C. will both raise the domestic price and increase the amount of the good produced domestically.

D. will neither raise the domestic price nor increase the amount of the good produced domestically

29. It consists of market participants or intermediaries who are directly responsible for making farmers’ product

available to the users at the right place, time and form

A. Producer subsystem

B. Flow subsystem

C. Channel subsystem

D. Functional subsystem

30. Diseconomies of scale:

A. occur when long-run average costs decrease as the rate of output increases.

B. emerge because marginal returns do not decline in the long-run.

C. emerge if all advantages of specialization are realized at low levels of operation.

D. when present, may create natural monopolies.

E. require extremely sophisticated technology.

31. All of the following statements about price floors are true except:

A. There will be a surplus of a commodity when a price floor is set above the equilibrium price.

B. The government may have to set up a system of storage to handle the excess supply when a price floor is set

above the equilibrium price.

C. If the price floor is set below the equilibrium price, the intervention will have no effect on the market.

D. If the price floor is set below the equilibrium price, the price must be reduced.

Use the graph below to answer # 32.

32. To be effective, a price ceiling must lie:

A. above P0 but below P2

B. anywhere above P0

C. above P3

D. anywhere below P0

33. Ernie works as a construction worker but have no job as of the moment. Ernie belongs to ______.

A. Structural unemployment

B. The underemployed workforce

C. Cyclical unemployment

D. Frictional unemployment

34. The financial arm of the Agrarian Reform Program.

A. Metrobank

B. Land Bank of the Philippines

C. Development Bank of the Phil.

D. Bank of the Phil. Islands

35. The cost that a firm incurs in purchasing or hiring any factor of production is referred to as

A. Implicit cost

B. Explicit cost

C. Variable cost

D. Fixed cost
36. Suppose your father, who is a potato farmer in Benguet, has decided that he grows the "best, potatoes in the

world." In other words, he is claiming that his potatoes are different than potatoes grown by other farmers. If his

claim is true (and he can convince consumers of this), then:

A. he can make profits in the long-run.

B. he can make profits in the short-run by increasing price and quantity.

C. he faces a downward sloping demand curve and his quantity decisions will have an effect on market price for his

potatoes.

D. while he may make a profit in the short-run, in the long-run competition will still force his profits to zero.

E. c and d.

37. A deflationary gap can be eliminated by

A. Decreasing investment

B. Decreasing government spending

C. Decreasing taxes

D. Decreasing autonomous consumption

38. . The use by the taxpayer of illegal or fraudulent means to defeat or reduce the payment of tax.

A. Tax exemption

B. Tax evasion

C. Tax avoidance

D. Tax transformation

39. The important difference between the characteristics of perfectly competitive and monopolistically competitive

markets is that firms in monopolistically competitive industries:

A. have a downward sloping and relatively inelastic demand (as compared to market demand.)

B. do not try to maximize profits by producing where MR = MC.

C. sell similar but not identical products.

D. have substantial barriers to deter the entry of competing firms while perfectly competitive firms do not.

40. It refers to how much of a good or service a buyer is willing to purchase at a single specified price, in a given

market, at a given time, ceteris paribus.

A. Quantity Supplied
B. Supply

C. Quantity Demand

D. Demand

41. Tupperware company uses the pricing strategy called

A. Price lining

B. Odd-centavo pricing

C. Reference pricing

D. Prestige pricing

42. What is the opportunity cost to you for driving to a free concert of Little Mix to Mall of Asia?

A. There is none since the concert is free.

B. The softdrinks you buy from the supermarket.

C. The cost of water you drink

D. The chance to meet new people who have the same likes as you.

E. The cost of gasoline.

43. The law of increasing (relative) opportunity costs expresses the fact that:

A. The government overspends and causes inflation.

B. Society cannot be on its Production Possibility Frontier.

C. The society must sacrifice ever-increasing amount of one good to get equal extra amounts of another good.

D. The society must sacrifice both goods to produce another good

44. The law of increasing (relative) opportunity costs expresses the fact that:

A. The government overspends and causes inflation.

B. Society cannot be on its Production Possibility Frontier.

C. The society must sacrifice ever-increasing amount of one good to get equal extra amounts of another good.

D. The society must sacrifice both goods to produce another good

45. Ramon is one of the many farmers producing rice. He wants to sell his produce but the price is low. If he is

going to demand for a higher price, no one will buy his produce. In what type of market does he belong?

A. perfect competition

B. monopoly
C. oligopoly

D. monopolistic competition

46. In the long-run for a competitive industry:

A. all factors of production are variable so that firms are free to enter or leave the market.

B. technology may change in response to profit opportunities.

C. all inputs are fixed for the industry as a whole.

D. firms can earn more than normal accounting profits if demand is high.

47. A field of economics that deals with the study of individual economic units operating within the economy.

A. Microeconomics

B. Macroeconomics

C. Production economics

D. Agricultural economics

48. In the long-run, competition in competitive markets:

A. yields economic inefficiency in the absence of external costs.

B. results in output being produced at maximum opportunity cost.

C. forces all surviving firms to adopt the most efficient technology.

D. guarantees each firm long-run economic profits.

E. may result in economic losses

49. The revenue added by the last worker hired is called the:

A. marginal physical product of labor.

B. marginal revenue product of labor.

C. wage rate.

D. marginal factor cost of labor.

E. marginal utility of labor.

50. A monopsony is a:

A. market with only one seller.

B. market with only one buyer.

C. market with only one product.

D. market that only employs one resource in its production process.

E. market that is protected by government regulation.

51. All of the following are examples of opportunity cost except:

A. the leisure time sacrificed to study for an exam.

B. the tuition fees paid to a university.

C. the income which could have been earned by a college student had he or she worked full time instead of attending

college.

D. the building which could have been built with the construction materials and labor used to build a new university

library.

E. all of the above are examples of opportunity costs.

52. Suppose you have to wait in line to purchase a soft drink at NBA Championship- Golden State Warriors and

Cleaveland Cavaliers game. The drink costs one dollar. While, waiting in line, you hear the crowd roar as Lebron

James scores a three-point. While running back to your seat, you fall and spill your drink on another spectator. What

is your opportunity cost for the drink?

A. the cost of the drink plus the lost enjoyment of not seeing Lebron James scores three-point.

B. the cost of the drink, the lost enjoyment of not seeing theLebron James scores three-point, your thirst (you didn't

get a drink), and the discomfort (to the other spectator) of sitting in the sun with wet, sticky clothing.

C. the lost enjoyment of not seeing Lebron James scores three-point, your thirst (you didn't get a drink), and the

discomfort (to the other spectator) of sitting in the sun with wet, sticky clothing.

D. the lost enjoyment of not seeingLebron James scores three-point, your thirst (you didn't get a drink), and your

discomfort (assuming the other spectator responded by throwing his drink in your lap) of sitting in the sun with wet,

sticky clothing

53. An act to promote the production, processing, marketing, and distribution of high-valued crops

a. R.A. 7900

b. R.A. 7394

C. R.A. 3844
D. R.A. 6657

54. A free good is not scarce because:

A. individuals can have all they desire at zero price.

B. price rations the good so that all individuals willing to pay the market price can buy the good and it is, therefore,

not scarce.

C. human desires for the good exceed the amounts available at a zero money price.

D. it is an abundant natural resource.

E. a and b.

55. In the Philippines, national income accounting is done and maintained by what office/agency:

a. Department of Budget and Management

b. Department of Trade & Industry

c. Department of Finance

d. National Economic Development Authority (NEDA)

56. GNP represents the:

a. market value of all intermediate goods and services produced by the economy within the year

b. market value of all final goods and services produced by the economy within the year

c. market value of all final and intermediate goods and services produced by the economy within the year

d. all of the above

57. Economists prefer to use real GNP than current or nominal GNP as a measure of aggregate output because

a. Current GNP always understates actual output changes

b. Real GNP adjusts current GNP for inflation

c. Real GNP adjusts for the unequal distribution of income

d. All of the above

58. Which of the following is not a component of GDP?

a. net exports

b. investments

c. sales of intermediate goods

d. government spending
59. Suppose that the consumer price index for 2007, 2008 and 2009 are 100, 110, and 125, respectively. This implies

that the general price level in 2009 is higher than that of 2007 by:

a. 25 pesos

b. 25 percent

c. 15 percent

d. 10 pesos

60. If the marginal propensity to consume (mpc) is 0.75 the marginal propensity to save (mps) is:

a. 15

b. 20

c. 25

d. 75

61. An increase in demand accompanied by a simultaneous decrease in supply will result in

a. a change in equilibrium quantity

b.equilibrium point will rise

c. a decrease in equilibrium price

d. equilibrium point will fall

62. If an increase in the price of good X causes the demand for good Y to decrease, it can be concluded that

a. X and Y are substitutes

b. X and Y are complements

c. X and Y are inferior goods

d. X and Y are superior goods

e. there is collusion in the market place

63. Which of the following would result in an increase in the supply of good A?

a. An increase in the price of A's substitute

b. An increase in the prices of resources used to produce good A

c. Technological advancement applicable to the production of A

d. A reduction in the price of A

64. Two goods are complements in consumption if:

a. both are inferior goods

b. the cross elasticity of demand between them is negative

c. both have negative price elasticities

d. one has a positive elasticity and the other has a negative price elasticity

65. Which one of the following will cause the demand curve for gasoline to shift to the right?

a. a fall in the price of cars

b. an increase in the supply of gasoline

c .a fall in the price of gasoline

d. a rise in the price of cars

66. If the cross elasticity of demand between peanut butter and cheese spread is 1.80, we can say that

a. Peanut butter and cheese spread have elastic demand

b. Peanut butter and cheese spread are both normal goods

c. Peanut butter and cheese spread are substitute goods

d. Peanut butter and cheese spread are complementary goods

67. Movements along a given demand curve are caused by changes in

a. Income

b. Price

c. Taste and preferences

d. Related goods

e. All of the above

68. It describes how the capitalistic economy works given the interaction between the households, who are the

owners of resources and the firms, who are the users of resources.

a. Circular Flow Model

b. Production Possibility Frontier

c. Transformation Curve

d. None of the above

69. They are the resource users who receive receipts or revenues as payment for the production and sales of goods

and services.
a. Household

b. Business firm

c. Government

d. Rest of the world

70. Factors of production (resources) include

a. land, capital, and interest

b. land, interest, and rent

c. labor, land, and capital

d. labor, capital, and profits

e. wages, rent, and interest

71. Which of the following is considered as the point of consumption?

a. point of transaction

b. point of concentration

c. point of last sale

d. point of transportation

72. Which of the following terms denote a want-satisfying power of an object or service?

a. goods

b. money

c. utility

d. profit

73. Study of the various agencies and business structure which perform the marketing process

a. commodity approach

b. institutional approach

c. functional approach

d. structure-conduct-performance approach

74. Which of the following refers to information gathered directly or first-hand such as interviews and surveys?

a. primary data

b. secondary data
c. both a and b

d. all of the above

75. The essential 4P’s of marketing are the following except one:

a. product

b. price

c. place

d. processing

76. The market for farm product is under pure competition. This means that;

a. a farm product are close substitute

b. there are a lot of similar products, each competing with one another

c. prices of products are held at a market price

d. all of the above

77. A function showing the physical relationship of combinations of inputs and maximum output of a certain

technology, putting prices aside.

a. cost function

b. production function

c. utility function

d. consumption function

78. A production period for which some of the inputs are fixed.

a. short run

b. long run

c. one cropping period

d. one year

79. Payments made by government to producers without any service or good in return.

a. subsidy

b. price control

c. price support

d. fiscal policy
80. Imposing a ceiling price will entail ______ in the market

a. deflation

b. surplus

c. shortage

d, benefits to consumers

81. Resources that are scarce relative to their uses

a. free resource

b. natural resource

c. economic resources

d. human resources

82. Resources that are abundant relative to their uses

a. free resource

b. natural resource

c. economic resources

d. human resources

83. The following are characteristics of pure competition except:

a. product homogeneity

b. no artificial resraints

c. difficulty to enter the market

d. many buyers and sellers

84. Established the National Irrigation Administration

a. RA 6900

b. RA 8435

c. RA 3601

d. RA 6657

85. Inputs that vary with output

a. economic resources

b. labor
c. variable inputs

d. fixed inputs

86. A point where revenue is equal to cost

a. optimum cost

b. least cost ratio

c. break-even point

d. equilibrium point

87. Additional satisfaction derived from consuming an additional unit of goods or services

a. TU

b. MU

c. AU

d. OU

88. Policy that has something to do with government expenditure and taxation

a. fiscal policy

b. monetary policy

c. expansionary policy

d. contractionary policy

89. Composed of savings plus consumption

a. national income

b. disposable income

c. marginal propensity to consume

d. consumption

90. The prolonged and deep recession

a. business cycle

b. depression

c. inflation

d. stagflation

91. GDP using current prices

a. real GDP

b. GDP per capita

c. nominal GDP

d. nominal GNP

92. The sum of the marginal propensity to consume and the marginal propensity to save is

a. equal to one

b. greater than one

c. zero

d. less than one

93. A curve showing the relationship of unemployment and inflation rate

a. indifference curve

b. production possibility frontier

c. Phillips curve

d. aggregate demand curve

94. Government revenues exceed its expenditures

a. budget surplus

b. budget deficit

c. balanced budget

d. budget cut

95. The normal short term ups and down of the economy

a. economic cycle

b. seasonal cycle

c. business cycle

d. price cycle

96. The meaning of the word “economics” is most closely associated with the word

a. free

b. scarce

c. unlimited
d. restricted

97. Manipulation of the public budget government spending and tax collections to achieve full employment is called

a. monetary policy

b. fiscal policy

c. public policy

d. economic policy

98. When the current price exceeds equilibrium price

a. there is shortage and price will rise

b. there is shortage and price will fall

c. there is surplus and price will rise

d. there is surplus and price will fall

99. Economics is

a. natural science

b. physical science

c. social science

d. exact science

100. F.O.B. means

a. Fee on Board

b. Free on Board

c. Freight on Board

d. Fine on Board