WITH ANSWERS

Multiple Choice. Choose and write the correct answer.

_________1. He is the Father of Modern Economics.

a. Alfred Marshall
b. Herbert Spencer
c. Adam Smith
d. Karl Marx

_________2. Alfred Marshall defined economics as the study of people in the ordinary business of life.
Which of the following BEST explains Marshall’s definition?

a. It includes the study of labor, land and capital, investment of money, income and production,
taxes and government.
b. It includes demand and supply.
c. It includes macroeconomics and microeconomics.
d. It includes firms and households.

_________3. Who defined economics as the science which studies human behavior as a relationship
between ends and scarce means which have alternative uses?

a. Karl Marx
b. Adam Smith
c. Alfred Marshall
d. Lionel Robbins

_________4. Which of the statement/s is/are definition/s of Gerardo P. Sicat on economics?

I. study of how economic units or agents make choices

II. involve the use of scarce resources
III. relate to the solution of economic problems
a. I only
b. I and II
c. I, II, III
d. II and III

_________5. Which is/are the economic units and agents?

I. Individuals
II. Families
III. Firms
IV. Industries
a. I, II, III, IV
b. II only
c. I and II
d. III and IV
_________6. Everyone should make choices. These choices relate to the solution of economic problems.
Choose an example of economic problems.

a. Production
b. Consumption
c. Distribution
d. all of the above

_________7. “The decisions we make today inform and influence our future.” This quote can relate to
what characteristic of economics.

a. Economics is the art of decision making

b. Economics is the science of choices.
c. Economics uses logical and evidenced-based approach in analyzing problems.
d. Economics deals with people.

_________8. How economics uses logical and evidence-based approach in analyzing problems?

a. by using current information to make empirically supported decisions

b. through including hearsays
c. through including lived experiences
d. by involving recent economic problems

_________9. Studying economics can develop your qualitative and quantitative skills and improve your
critical-thinking skills.

a. True
b. False

_________10. Studying economics is vital on the study of the complex society where there are
interactions and relationships with other people. Therefore, ______.

a. Economics is the science of choices.

b. Economics uses logical and evidenced-based approach in analyzing problems.
c. Economics deals with people.
d. Economics provides better understanding of current events.

_________11. A branch of economics that focuses on the relationship between social behavior and
economics.

a. Interpersonal Economics
b. social
c. Interactive Economics
d. political

_________12. How economics supplies better understanding of the updated events and issues?

I. focusing on national context

II. including local, national, and global issues
III. viewing issues with objectivity
 a. I only
b. I and III
c. III
d. II and III

_________13. Which of the following is NOT one of the factors of production?

a. Land
b. Capital
c. Labor
d. none of the above

_________14. Person who takes risks to start and operate business

a. Business-minded person
b. Proletariat
c. Entrepreneur
d. Manager

_________15. These are the qualities of an entrepreneur EXCEPT

I. Takes risks
II. Organizes natural, human, and capital resources
III. Promotes tardiness
IV. Makes smart decisions
a. I and III
b. III
c. II
d. I, II, III, IV

_________16. Which of the following the thing a person must have to live?

a. water
b. cellphone
c. toys
d. car

________17. These are the things the person doesn’t really need but would like to have?

a. needs
b. wants
c. needs and wants
d. cellphones

________18. Which of the following is the BEST definition of demand?

a. curve of the various quantities of goods and services

b. goods and services that the consumers willing to buy
c. schedule of goods and services which the buyers want and able to buy at a specific price in various
time
 d. curves of several numbers of goods and services that the buyers willing to buy at different prices
at a given time

________19. What kind of relationship exists between price and quantity demanded?

a. direct
b. inverse
c. cumulative
d. associative

________20. The law of demand states that, assuming all else is held constant (ceteris paribus), the
quantity demanded for goods rise as the price falls.

a. True
b. False

________21. The following are the non-price determinants of demand EXCEPT

a. needs
b. income
c. habit
d. Inflation

________22. How do the consumers’ tastes affect the mobility of demand?

a. When the taste increases on a certain product or service, the demand will also increase.
b. Tastes refer to consumers' attitude towards a product.
c. When tastes fall, quantity demanded would decrease
d. both a and c

________23. A type of good that can replace the other good.

a. Complementary
b. Supplementary

________24. Good that is used together with the other good.

a. Supplementary
b. Complementary

________25. Which is/are true about consumer expectations?

I. say future prices and income

II. tell the value of economic goods
III. affect today’s demand for the product or service
a. I only
b. I, II, and III
c. II
d. II and III
________26. It is the schedule or a curve of the various quantities of goods and services that producers
are willing and can sell at different prices at a given time.

a. Supply
b. Demand

________27. The law of supply states that, assuming all else is held constant, the quantity supplied for a
good rises as the price increases.

a. True
b. False

________28. What kind of relationship exists between price and quantity supplied?

a. direct
b. Inverse

________29. Which of the following is/are determinants of supply?

I. Price
II. Resource Prices
III. Production Technology
a. I
b. I and III
c. I, II, and III
d. III

________30. Improvements in technology enable the firms to produce more with several resources.

a. True
b. False
c. cannot be determined

________31. How do sellers’ expectations influence the quantity supplied?

a. lessening the stocks when there is a prediction of higher prices for their products
b. disposing the products now if future prices are expected to decline
c. a and b

________32. When there are more buyers

a. sellers offer more goods and services

b. there are few sellers
c. there will be few goods and services
d. all of the above

________33. The point where supply equals demand for a product and the equilibrium price is where the
hypothetical supply and demand curves intersect.

a. Equilibrium
b. Balance
 c. Equality
d. Equity

________34. The responsiveness of a dependent economic variable to changes in influencing factors.

a. Elasticity
b. Demand Elasticity
c. Income Elasticity
d. Supply Elasticity

________35. Demand elasticity refers to the response of the consumers to changes in determinants of
demand. The following are the determinants of demand except

a. Price
b. Income
c. Price of related products
d. Number of buyers

________36. When Joe’s income increases, he stops buying cheap cars. What type of elasticity is Joe’s
situation?

a. Income elasticity
b. Demand elasticity
c. Price elasticity

________37. If the price of Cola A doubles, the quantity demanded for Cola A will fall when consumers
switch to less-expensive Cola B. This is example of

a. Price elasticity
b. Income elasticity
c. Cross Price Elasticity

________38. If the price of coffee increases, the quantity demanded for tea (a substitute beverage)
increases as consumers switch to a less expensive yet substitutable alternative. What elasticity
emphasizes on the situation?

a. Cross Price Elasticity

b. Price Elasticity
c. Income elasticity
d. Demand elasticity

________39. Goods that can be used in activities aimed to satisfy the same needs, one in the place of
another

a. Substitute
b. Complement
c. Alternative

________40. If no close substitutes are available, the substitution effect will be small and the demand
inelastic.
 a. True
b. False
c. cannot be determined

________41. The higher the percentage of the consumer's income that the product's price represents,
the higher the elasticity tends to be.

a. False
b. True

________42. The more necessary a good is, the higher the elasticity, since people will buy it no matter
the price, such as the case of insulin for diabetics.

a. True
b. False

________43. When fuel prices increase suddenly, consumers may still fill up their empty tanks in the short
run. But when prices remain high over several years, more consumers will reduce their demand for fuel
by switching to carpooling or public transportation or investing in more fuel-efficient vehicles.

This situation is an example of what factor affecting demand elasticity.

a. Time horizon
b. Luxuries and Necessities
c. proportion of income spent on the product

________44. An attachment to a certain brand, either out of tradition or because of proprietary barrier,
can override sensitivity to price changes, resulting in more inelastic demand.

This situation is an example of what factor affecting demand elasticity.

a. Luxuries and Necessities

b. Time horizon
c. Brand Loyalty

________45. Inelastic demand is a type of demand that is necessary for humans to thrive in society. The
following are sample of goods with inelastic demand EXCEPT

a. rice
b. egg
c. water
d. potato chips

________46. Elastic demand involves on the products that can be easily replaced by another goods. Which
of the following goods are belong to elastic demand?

a. Gasoline
b. Rice
c. Cable TV
________47. A commodity is said to have a perfectly inelastic demand if the quantity demanded or
consumed of it does not respond to a change in the income of the consumer.

a. True
b. False

________48. Normal goods have a positive income elasticity of demand so as consumers' income rises,

a. more is demanded at each price

b. less is demanded at each price

________49. Inferior goods have a negative income elasticity of demand meaning that demand falls as

a. income rises
b. Income decreases

________50. These are available if the consumer has the money to be able to buy it.

a. Superior
b. inferior