4th Periodical Exam in Applied Economics

Grade 12- GA and ABM

2nd Semester, SY 2018 – 2019

Instruction: Answer what is asked. Work individually. Cell phones are not allowed. Use calculators. Good luck!

TEST I. MATCHING TYPE. Choose the letter of the correct answer

1. A degree of responsiveness of Qd to changes in the market price. A. Shortage
2. a-bP B. Elasticity of Demand
3. c+dP C. Demand equation
4. Graphical representation of a demand schedule. D. Surplus
5. The willingness and ability of producers to sell goods at all alternative prices E. Demand
6. The consumer’s desire for a specific good or service F. Demand curve
7. A condition in which market demand is equal to market supply G. Supply equation
8. A condition in which market demand is greater than market supply H. Market Equilibrium
9. A condition in which market demand is less than market supply I. Supply curve
10. Graphical representation of a supply schedule J. Supply
K. Point elasticity

TEST II. IDENTIFICATION. Identify the elasticity category of the following equation.
11. Ed>1
12. Ed<1>0
13. Ed=1
14. Ed=0
15. Ed=∞

TEST III. TRUE/FALSE. Draw a STAR if the statement is true. If false, draw a CIRCLE.
16. Demand is elastic for a product with many substitute goods.
17. The demand for luxuries tend is elastic while inelastic for necessities.
18. The demand for a product tends to be more elastic over a long period of time.
19. Change in demand is the shifting of the demand curve due the change in one of its determinants.
20. Higher cost of production would cause the supply to increase.
21. A rise in income normally shifts demand curve outward to the right
22. Modern technology that uses modern machines increases supply of goods.
23. Price will increase if there is increase in demand while supply remains constant.
24. Price will remain constant if both demand and supply decreases by the same amount.
25. Two goods are called substitute if an increase in the purchase of one good will result to an increase in the
quantity purchased of the other good, ceteris paribus

TEST IV. ELASTICITY

26-30. How will the poultry meat suppliers respond if the government favors the price increase policy for poultry meat
products tomorrow? Explain your answer in a graph using the concept of elasticity of supply
31-35. ARC ELASTICITY
Suppose that because of the impact of typhoon in Ormoc, the price of pineapple increases from P20 to P30 each. And
the demand falls from 1000 to 500. Calculate the elasticity of demand for pineapple. Identify the elasticity category.
Show your solution
36-40 . POINT ELASTICITY. Calculate and identify the elasticity category.
P1= 4 P2= 5 Q1= 20 Q2=15

TEST V. Market Equilibrium

41-45. Given from the following equations: Qd = 10-0.75P and Qs = 4+0.25P, derive mathematically the equilibrium price and
equilibrium quantity. Show your solution.
46. What will happen to price when Qd < Qs?
47. What will happen to price when Qd > Qs?
48. What will happen to price if Qd=Qs?
49.50. State the Law of Demand and Law of Supply with respect to changes in the price.

Annabel Claire O. Arinto

Subject Teacher