Political science is the science of reasoning and correct
thinking to determine validity of a given statement.
False - Logic
Answers to the three basic economic problems are
arrived at in the market. True
Economic resources are limited and can be combined
to produce commodities. True
Steel bars and cement used in construction are
consumer goods. False - capital
Goods that directly satisfy human want are: Consumer
goods
Economists who are concerned with the behavior of
individual households, firms, and industries are
studying: microeconomics
Opportunity cost is the value of the next best alternative
that must be given up when a decision is made. True
Graphs are visual representation of data that display
relationships among variable.True
Defined economics as a study of people in the ordinary
business of life. Alfred Marshall
Statistics is a tool in economics. True
Adam Smith is the father of economics. True
Economics is a natural science which deals with the
equitable allocation and optimum utilization of
resources. False- social
The graph’s surface is divided into two. False -
quadrants
Human wants are characterized by the following,
except: Wants are scarce
Economist is concerned with: All of the choices
If the quantity demanded is 10,000 bags rice and the
quantity supplied is 6,000 bags, then the price of rice in
the market is: greater than the equilibrium price.
Surplus refers to the negative difference between
quantity supplied and quantity demanded.
False - positive
Coca Cola and Pepsi Cola are substitutes, hence:
the demand for PepsiCo increases when Coke
increase its price
An increase in the income of consumers will cause the:
Demand for all goods to rise
If the supply and demand curves intersect at a price of
89 pesos, any price below that would result to:
A shortage
The table or list of the prices and the corresponding
volume consumers are willing to buy or availed of is
also called: Demand Schedule
Change in the world market price of a product results to
a shift of the supply curve to either left or right. True
A shift in the demand curve to the right signifies
reduction in demand. False - increase
Household and individual consumption is the driving
force in any economy. False - Demand
The effect of market prices going down is shown by the
demand and supply curves: All of the choices
Which of the following statements is not true: Beliefs
and traditions
Ceteris paribus indicates that something would be the
case other things being equal. True
Any mechanism by which seller sand buyers negotiate
an exchange is called a market. True
Which of the following statements is not true: None of
the choices
Normal goods have positive income elasticity since the
demand for such goods decreases when the income
increases. False - increase
If the income elasticity is positive but less than one, the
commodity is: Necessity
Product X is unitary elastic, since its price demand
elasticity is computed at –1 False - 1
The price elasticity of demand measures how much the
quantity supplied of a product respond to a change in its
price. True
The graphical representation of elastic showing a
vertical curve indicates: Perfectly inelastic price
demand elasticity
The supply elasticity of agricultural products: Inelastic
If the price elasticity of demand is unitary; increasing the
price of the product would result to: The revenue will
not change
If supply elasticity is more than one, a price increase will
decrease total revenues. False - increase
Elasticity is concerned with percentages and not with
units of goods and services. True
Supply elasticity is affected not only by price but by any
of the following: All of the choices
A graphical representation of elasticity showing a very
steep curve is an indication of: Inelastic price demand
elasticity
Product interdependence can be measured using the
cross price elasticity. True
What type of price demand elasticity will be manifested
by an insulin dependent diabetic patient on cost of
insulin: Perfectly Inelastic
Engel’s curve for inferior goods has positive slope.
False - negative
When the quantity demanded remained unchanged as
its price changes, the coefficient of price elasticity is:
Equal to one
The curve showing the highest level of satisfaction is
situated: Farthest from the point of origin
Consumer behavior is directly affected by any of the
following internal factors except: Raw materials cost
The budget line takes into account the income and the
prices of goods and services. True
Indifference curves are positively sloped. False -
negatively
Indifference curve (IC) M lies between IC A and IC I.
Your graph indicates that: None of the choices
The consumers’ decisions on what goods and services
to buy is affected by their tastes and preferences. False
- expenditures on consumer goods
The ordinal utility approach measures satisfaction in
utils. False - cardinal
A diagram with more than one indifference curve is
called: Indifference Map
The consumer equilibrium is that point of intersection
between the price line and the indifference curves.
False - tangent
The indifference curve analysis is brain child of:
Vilfredo Pareto
All combinations of two products that consumers can
purchase given a certain income and product prices is
the: Budget Line
The curve that shows the different combinations of two
goods or service that would give the same level of
satisfaction is demand curve. False - indifference
curve
The extra satisfaction you get from successive
consumption of the same product is: Marginal Utility
The marginal utility of the 6t unit of Product C is
calculated at negative 8. This means that: Consuming
the 9th unit of Product C will give additional
satisfaction
Indifference curves are downward sloping to the right
and are concave in shape. True
Which of the following is not a determinant of the
demand: Technology
Economic profit takes into account the opportunity
costs. True
Graph is a tool to determine the relationships between
the production costs curves. True
The costs of machineries and equipments in the
manufacturing business are considered short run
variable costs. True
The unit cost of the product is also its marginal cost.
False - average
The relationship between the volume of inputs and
outputs can be expressed in an equation called
production function. True
Income received from the sale of an additional unit of
output Total revenue
Interest, Profit, Rent, Salary and Wage Factor
Payments
The total amount received by the firm from the sale of
its product total revenue
Additional cost from producing one extra unit of output
Marginal cost
The firm's actual expenditures Fixed Cost
Value of second best alternative opportunity cost
Indicated by a horizontal cost curve Marginal cost
Point where the MC=MR and the positive difference
between TR and TC is highest Maximum Profit
A situation where the amounts of total revenue and total
cost are the same. Break even
AFC + AVC Average cost
It is a measure of how much the quantity demanded of
one good responds to a change in the price of another
good. Cross price elasticity
An increase in income will result to a decrease in
demand for inferior products. True
Economics is about managing scarcity of the limited
resources. True
Consumer demand is a driving force for economic
growth. True
Economists who are concerned with the behavior of
individual households, firms, and industries are studying
macroeconomics. Microeconomics
The marginal product of the 5th worker is zero. This
means that: The total volume of production is at its
low
Isocost is the producer’s indifference curve. Isoquant
An isoquant map is composed of a series of indifference
curves. True
The consumer behavior is affected by both internal and
external factors. True
The graphical representation of elasticity showing a
horizontal curve indicates: Perfectly elastic price
demand elasticity
An entrepreneur is a person who manages the factors
of production and assumes the risks of a business
venture. True
Production leads to consumption but consumption also
leads to production. True
The change in total product resulting from a change in
the variable input is: Marginal product
Hermann Heinrich Gossen is the proponent of ordinal
utility theory. False
The table or list of the prices and the corresponding
volume producers are willing to sell is called a demand
schedule. False - supply
There are two approaches in measuring consumer
satisfaction. True
Goods that contribute to a person‘s comfort and well–
being are capital goods. True
A graphical representation of elasticity showing a
slanting curve is an indication of: Unitary elasticity
If the demand and supply curves do not change their
positions, the change in the quantities is brought about
by adjustment in income. True
A 15% adjustment in price leads to a 16% change in the
volume. This reaction showed an elastic price demand
for the product. True
Total product per unit of variable input. Average
Product
The point of tangency between the indifference curve
and the budget line signifies: All of the choices
Consumers satisfaction can be quantitatively measured
through: Ordinal Utility
When total utility is at its maximum, the marginal utility
is equal to zero. True
It indicates various combinations of two factors of
production which give the same level of output per unit
of time. Isoquant
Economics is a social science which deals with the
equitable allocation and optimum utilization of
resources. False - Political Science
Long run costs include both fixed and variable costs.
False - Short–run
Production cost has an inverse relationship with
demand. False - supply
When the quantity demanded remained unchanged as
its price changes, the position of the curve is: Vertical
Producer’s budget line. Isocost Curve
Refers to the process of converting inputs into outputs.
Production
Production stage characterized by negative returns.
Stage 3
The price of commodity is a common determinant for
both demand and supply. True
Price demand elasticity for luxury good generally tends
to be inelastic. False - elastic
The cross price elasticity of rice and corn is positive
which means that Rice and corn are substitutes
The additional income obtained by producing and
selling an additional unit of product is marginal product.
False - revenue
The firm’s selling price is an important determinant of its
revenue True
The positive value of marginal utility means that there is
satisfaction from the consumption of that good. True
The total cost curve originates from the value of the
fixed cost. True
Consumption deals with the satisfaction of human
needs and wants. True
The demand curve is downward sloping because: The
quantity demanded is decreasing with the reduction
in price
Essential goods are those that contribute to a person's
comfort and well–being. False - consumer
Critical thinking is an important and necessary skill in
the study of economics. True
We can determine supply and demand elasticity
through graphs. True
Series of indifference curves in one diagram is called
indifference map. True
The satisfaction obtained from the consumption of
commodities are measurable. True
Supernormal profit refers to the minimum level of profit
necessary for firm to continue its operation. False -
normal
A horizontal demand curve is a feature of what market
structure: Perfect Competition
A perfectly elastic demand curve is a characteristic of a
monopolistic competition. False - perfect
A fruit vendor after paying a minimal market fee to sell
any fruit in season is part of : Monopolistic
Competition
Open oligopoly allows for new entrants to the industry
without any restrictions. True
During brown outs, candles, flashlights, and generator
sets are being used as alternative sources of power.
These are classified as: Close substitutes
A market structure composed of many sellers trading
differentiated products is: Monopolistic Competition
A monopoly which charges different prices for its
customer is: Discriminating Monopoly
Under a monopolistic competition, firms are incurring
selling costs to increase sales. True
The following are characteristics of a monopoly except:
Large number of sellers
Sellers are price makers in a perfectly competitive
market. False - takers
Type of product differentiation using sizes, colors,
design and shapes: Physical differentiation
A kinked curve for sellers and producers exist in the
following market structure Oligopoly
Taxation and price control are some of the government
interventions in a monopoly to the benefit of consumers.
True
An unusual and severe form of recession: Depression
Savings and taxes are leakages from the circular flow of
economic activities. True
The company policy requires all employees to retire
after 30 years of service, regardless of age. Mr. X who
is only 50 years old is affected by this policy.
Concealed Unemployment
Consumption is the portion of income used to purchase
goods and services to satisfy wants and needs. True
Consumer spending is considered the most important
determinant of short-term demand in any economy.
True
Fiscal policy is concerned with managing the amount of
money in circulation. False - Monetary
The following are injections in the economy, except:
Savings
Full employment is that economic condition where every
individual who wants to work gets employed. True
Marginal propensity to save refers to how an increase in
one economic activity causes a ripple or domino effect
on other related economic activities. False - Multiplier
effect
The classical theory of employment was espoused by:
Adam Smith
Company XYZ implemented a new computerized
accounting system and corresponding trained
concerned staff in the Accounting Department.
However, this also created displacement to the extent of
some personnel transferring to other departments and
even resignation. The type of resulting unemployment
is: Frictional Unemployment
The business cycle has three phases characterized by
changing economic activities like investments and
employment levels. False - four
The economist behind the consumption and savings
function showing the relationship between disposable
income and consumer spending: John Maynard
Keynes
Cyclical unemployment is a result of the changing levels
of demand depending on the time of the year. False -
Seasonal
Milton Friedman’s theory that consumption is
determined not only by current income but also by
future expected income: Permanent Income
Hypothesis
The expenditure approach in national income
accounting includes interest and taxes paid. True
To avoid double counting, value of intermediate
products are considered in national accounting. True
Philippines' GDP measures only those goods and
services produced in our country. True
The country’s economic growth is better measured in
terms of real GDP. True
GNP measures the value of all final goods and services
produced by a country and its nationals regardless of
whether they are produced within or outside the
country’s territory. True
The total amount of capital that has worn out during the
year Depreciation
Items produced by other countries and brought in to
another country. balance of payments
Institutional sectors or economic units classified in
national account Transactors
An indicator of the change in the average retail prices of
a fixed basket of goods and services. Consumer Price
Index
Provides a systematic statistical framework for
summarizing and analyzing the economic flows and
wealth of the country System of National Accounts
Constitute the bulk of the GDP by type of expenditure
Household Consumption
Total market value of all final goods and services
produced in a country in a given year. Gross Domestic
Product
GDP based on current prices. nominal GDP
Home-based workers, street vendors, smugglers, black
market activities underground economy
Difference between the value of total exports and total
imports. Imports
Cooperatives can be categorized based on membership
and territorial consideration. True
Taxes are the life blood of any government. True
It is believed that agrarian reform is the foundation of
industrial progress. True
Transforming farmers from tillers of land to
entrepreneurs is one of the objectives of agrarian
reform. True
The passive incomes which are subject to taxation
include interest, dividends, fringe benefits, and capital
gains. True
Taxes imposed by the local government units. local tax
Tax imposed by the government to raise funds for its
various projects. Revenue
Inherent power of the state, through legislature, to
impose burdens on its citizens to raise revenues for
government projects. Taxation
Government collecting agency for income and business
taxes. Bureau of Internal Revenue
Promoting the interests of farmers, especially by
seeking a more equitable basis of land ownership.
Agrarian Reform
A letter informing the landowner that his land is subject
to acquisition and distribution to CARP beneficiaries.
Notice of Coverage
Progressive taxation based on the “ability to pay”
principle. Theoretical justice
Tax of fixed proportion according to the value of the
object of taxation. Ad Valorem
Illegal efforts not to pay taxes, hence punishable by law.
Tax Evasion
Organization of people working for and willing to
contribute talents and finances for the attainment of
common interests and objectives. Cooperative
The end point of Stage 1 is characterized by a zero
marginal product. False - Stage 2
The point of tangency between the isocost and the
isoquant signifies: All of the choices

The law of diminishing marginal returns indicates that
marginal returns: Eventually diminish
The process of converting inputs into outputs is:
Production
The extra unit produced per unit change in the quantity
of variable input keeping all other factors constant is:
Marginal product
A period of time enough for all factors of production to
be adjusted relative to production volume is: Long Run
The fixed inputs are observed to be underutilized during
Stage 1 of production. False - Stage 2
Isoquants are downward sloping to the right and are
convex in shape. True
The various combinations of two factors of production
which result to the same level of output per unit of time.
Isoquant
Diminishing marginal returns for the first four units of
variable input is exhibited by the following total product
sequence: 50, 40, 30, 20
Entrepreneurship is one of the production outputs.
False - inputs
Stage 3 of production is characterized by increasing
product curves. False - decreasing
The minimum volume of production is reached when the
marginal production is equal to zero. False - maximum
The following construction materials are variable inputs,
except: cement mixer
Economics was derived from the Greek word
‘Oikonomus’. False - Oikonomia
Wants and desires are goods and services for men to
survive. True
The law of demand states that considering all other
factors constant, there is an inverse relationship
between price and quantity demanded. True
The kinked demand curve is a feature of an oligopsony.
False - oligopoly
The point where MC=MR is the profit maximization
point. True
Entry of the firm to the industry is affected by barriers to
trade. True
The capital account component of national accounting
covers foreign and domestic investments. False -
financial account
Refers to the general increase in the level of prices of
goods and services over a period of time: Inflation
Competition is a prime determinant of the type of
market structure. True
Macroeconomic models aim to find and explain the
behavior and the accomplishments of the economy and
use the results in planning. False - Economic model
The focus and scope of decision of macroeconomics
are: Government decisions
A high GDP does not necessarily indicate absence of
poverty. True
Economists who are concerned about the behavior of
individual households, firms, and industries are
studying: Microeconomics
GDP does not totally include the effect of environmental
degradation in the economy. False - does
Economic territory does not necessarily equate with
geographic territory. True
Supernormal profit which serves as incentive for other
firms to enter the industry is also called: Normal Profit
The power of the government to impose burdens upon
the subjects and the objects, within its jurisdiction, for
the purpose of raising revenues. Taxation
Taxation is voluntary fee levied on individuals and
corporations as revenue source of the government.
False - involuntary
There is only one way of computing the GDP. False
A simplified description of reality, designed to yield
hypotheses about economic behavior that can be
tested. Economic Model
Producers’ cooperative has for its purpose procurement
and distribution of commodities to its members and non-
members. False - Consumer
Government agency in-charge of implementing the
CARP. Department of Agrarian Reform
Unemployment attributable to the business cycle:
Cyclical
A country is a net importer when the value of its export
is higher than the value of its imports. False - exporter
Production structures involve support to farmers in saving rather than on the consumption of goods and
terms of credit, agricultural inputs like seeds and services. Marginal Propensity to save
fertilizers, processing and marketing. False - Support
services This graph is an indication of: Unitary elasticity

Economies of scale refers to a lower per unit cost

because of the higher volume of production. False -
reduction

Oligopolists enter into price agreement called cartel, to

control the market for their products. True

Current GDP is also called nominal GDP. True

The branch of government empowered to impose taxes.

Department of Budget and Management

A market situation where firms in the industry follow a

common pricing policy to avoid competition among
themselves: Collusive oligopoly

The classical theory of employment states that

employment is triggered by the aggregate demand for
goods and services. True

Regressive taxation wherein the tax rate increases as

the tax base increases is implemented in the
Philippines. TrueFalse - Progressive

The GDP is computed on a quarterly basis. True

It relates to the nature, type, and actual process of farm

operation. Production structure

Oligopoly is characterized by many sellers in the

industry. False

The base period is a month. False

Government policies determine the types of market

structure in an economy. True

The lead government agencies for CARPER

implementation are the Department of Agriculture (DA)
and Department of Agrarian Reform (DAR). False -
Department of Environment and Natural Resources
(DENR)

Branch of economics that studies the supply and

demand of a particular market Microeconomics

Net exports is the difference between total exports and

total imports. True

The kinked curve explains price rigidity in a monopoly.

False

Marginal Propensity to Save is the proportion of an

aggregate raise in pay that a consumer spends on