Agricultural Economics & Marketing

PRACTICE TEST IN AGRICULTURAL ECONOMICS & MARKETING b. Production Possibility Frontier D. None of the
above
DIRECTION: Encircle the letter of the best answer from the choices given.
5. They are the resource users who receive receipts or revenues as
1. The analysis of how an individual consumer or producer payment for the production and sales of goods and services.
responds to changes in economic environment is
a. Household C. Government
A. Macroeconomics C. Economic B. Business firm D. Rest of the
theory world
B. Microeconomics D. Economic
policy 6. It is an economic system in which all major decisions concerning
the level of resource use, the composition and distribution of
2. The analyses of aggregate economic magnitudes like inflation, output and the organization of production are determined by
money supply, interest, balance of payment, among others. the price system.

A. Macroeconomics C. Economic a. Socialism C. Capitalism

Theory b. Communism D. Fascism
b. Microeconomics D. Economic
Policy 7. It is an economic system characterized by public ownership of
property resources and collective determination of economic
3. An economic resource that is considered as a “free gift of decisions through central economic planning.
nature”
a. Socialism C. Capitalism
A. Land D. b. Communism D. Fascism
Entrepreneurial ability
b. Capital E. Both A and B 8. Economic decisions are guided by which of the following
c. Labor F. Both C and D criteria?

4. It describes how the capitalistic economy works given the a. Marginal Costs are greater than Marginal Benefits
interaction between the households, who are the owners of b. Marginal Costs are lesser than Marginal Benefits
resources and the firms, who are the users of resources. c. Neither A nor B
d. Either A nor B
A. Circular Flow Model C.
Transformation Curve

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 Agricultural Economics & Marketing

9. It formalizes the relationship between price and quantity 13. A marketing service that influences the buyers and/or
consumers are willing to buy at those prices. consumers to buy. The objective is to inform consumers what
is available for purchase, especially if the product is new in the
a. Law of demand C. Demand market
b. Law of supply D. Supply
a. market intelligence C. advertising
10. Movements along a given demand curve are caused by changes b. market research D. branching
in
14. It is said to exist when the prevailing price of a commodity is
a. Income D. Related goods above the equilibrium price.
b. Price E. All of the
above a. Shortage C. Producer
c. Taste and preferences surplus
b. Surplus D. Consumer
11. A downward shift in the demand curve will bring about surplus

a. an increase in equilibrium quantity and an increase in 15. Customarily, when graphing, price is on the Y-axis and quantity is
equilibrium price on the X-axis. If it is interchanged, the demand curve will be
b. an increase in equilibrium price and decrease in
equilibrium quantity a. sloping downwards to the right C. sloping
c. an increase in equilibrium quantity and a decrease in upwards to the right
equilibrium price b. sloping downwards to the left D. sloping
d. a decrease in equilibrium price and decrease in upwards
equilibrium quantity
16. Which of the following statements is incorrect?
12. Expectation of higher future food prices may prompt consumers
to buy a. Microeconomics is primarily concerned with the
economic activities of the household, business firms and
a. more food in the future C. more food the government sector
today b. Microeconomics is primarily concerned with the flow of
b. lesser food today D. none of the goods and services from business firms to consumers,
above the composition of the flow, and the evaluation or
pricing of the component parts of the flow.

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 Agricultural Economics & Marketing

c. Microeconomics is primarily concerned with the

problem of what, how and for whom to produce 20. Commodities whose demand varies directly with money income
d. Microeconomics is primarily concerned with the refers to
economic behavior of decision making units when at
equilibrium a. substitute goods C. normal goods
b. complementary goods D. inferior
17. A change in demand or supply. goods

a. is caused by a change in price 21. The relationship that exists between price and quantity
b. is represented by a movement from one point to demanded of independent goods
another on the demand or supply curve
c. is caused by a change in any of the determinants of a. inverse C. either A or B
demand or supply other than price and is represented by b. direct D. Neither A nor
a shift of the entire demand or supply curve B
d. none of the above
22. The relationship that exists between price and quantity
18. A change in quantity demanded or supplied demanded of substitute goods

a. is caused by any of the determinants of demand or a. inverse C. either A or B

supply b. direct D. Neither A nor
b. is caused by a change in price of the good itself, when all B
other things remain unchanged and is represented by a
movement from one point to another on the demand or 23. Relationship between a change in supply of and equilibrium
supply curve price is
c. is represented by a shift of the entire demand or supply
curve a. inverse C. either A or B
d. none of the above b. direct D. none

19. The market equilibrium point for a commodity is determined by: 24. If there is an increase in the price of sugar, there will be

a. the market demand C. the balancing a. A movement along a given demand curve for sugar
forces of demand and supply downwards
b. the market supply D. any of the b. A movement along a given demand curve for sugar
above upwards

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 Agricultural Economics & Marketing

c. A shift of the demand curve for sugar to the right E. All of the
d. A shift of the demand curve for sugar to the left above
29. If the price of Good X is negatively related with the demand for
25. If the number of cellular phone users increases, there will be Good Y, then,

a. A movement along a given demand curve for cellular a. Goods X and Y are substitutes C. Goods X and
phone downwards Y are independent
b. A movement along a given demand curve for cellular b. Goods X and Y are complements D. none of the
phone upwards above
c. A shift of the demand curve for cell phone to the right
d. A shift of the demand curve for cell phone to the left 30. A decrease in the supply of Good A can be systematically caused
by
26. If demand and supply both increase, equilibrium quantity will
a. An increase in the prices of other commodities
a. Increase C. Remain b. An increase in the price of inputs important to the
unchanged production of this good
b. Decrease c. A decrease in the price of inputs important to the
production of this good
27. Which of the following must be satisfied in drawing the d. Expectation of lower future prices
production possibilities curve? 31. The supply of a product is said to increase when

a. fixed inputs and fixed technology C. fixed outputs a. the supply curve shifts upward C. the supply
and fixed technology curve shifts downward
b. fixed outputs and fixed inputs D. None of the b. the supply curve shifts leftward D. the price of
above the good increases

28. Which of the following will shift the production possibilities For the next four (4) items, consider the following demand and
outward? supply equations for buko pie

a. New plants and equipment are built C. Economic Qd = 750 – 15P Qs = -150 + 30P
growth
b. Population growth D. Change in where Qd = quantity demanded of buko pie
production technique Qs = quantity supplied of buko pie
P = price of buko pie

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a. If supply curve shifts to the right while demand curve

32. The equilibrium price of buko pie is shifts to the left, equilibrium price will rise
a. 15 b. If supply curve shifts to the right while demand curve
b. 5 shifts to the left, equilibrium price will fall
c. 20 c. If supply curve shifts to the left while demand curve
d. 90 shifts to the right, equilibrium price will fall
e. Cannot be determined without additional information d. If demand curve shifts to the right while supply curve is
unchanged, equilibrium price will fall
33. The equilibrium quantity of buko pie is:
Refer to the following hypothetical table for the next three (3) items
a. 45
b. 450 QD Price QS
c. 4.5 80 4.80 73
d. cannot be determined without additional information 75 5.00 75
70 5.20 77
34. Surplus of buko pies will occur if: 65 5.40 79
60 5.60 81
a. Its price will be higher than the equilibrium price
b. Its price will be lower than the equilibrium price 37. If the price increases from P 4.80 to P 5.20, the price elasticity of
c. There will be additional buko pie outlets the product will be
d. There will be less buko pie outlets
e. cannot be determined without additional information a. -1.67 and the product has inelastic demand
b. -1.67 and the product has elastic demand
35. Shortage of buko pies will occur if: c. -0.6 and the product is elastic
d. -0.6 and the product is inelastic
a. Its price will be higher than the equilibrium price
b. Its price will be lower than the equilibrium price 38. The Total Revenue can be determined by multiplying
c. There will be additional buko pie outlets
d. There will be less buko pie outlets a. QD and price C. QD and QS
e. cannot be determined without additional information b. QS and price D. Cannot be
determined
36. Which of the following statements is correct?
39. The Total Revenue at market equilibrium is

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a. 375 D. 351 c. More pandesal were purchased in January because the

b. 384 e. None of the Christmas season is over
above d. Income of the household is positively related with their
c. 364 demand for pandesal

40. If an outlet or store sells 250 bottles of Bench Body Spray per 42. With the available information, the income elasticity of pandesal
month when the price is P100 and sells 200 bottles when the will be
price is P125, the price elasticity of demand is
a. positive and greater than one to prove that pandesal is a
a. -1.0 and demand is inelastic C. >1 and luxury good
demand is elastic b. positive but less than one to prove that pandesal is a
b. -1.0 and demand is unitary elastic D. <1 and the necessity
demand is inelastic c. Negative to prove that pandesal is an inferior good

Use the following situation in answering the next two (2) items 43. If the cross elasticity of demand between peanut butter and
below: cheese spread is 1.80, we can say that
Consider the hypothetical price and quantity demanded for
pandesal (in pc) for 2 months of a household as follows: 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
Price/pc Qd. d. Peanut butter and cheese spread are complementary
Income goods
Dec 2006 2.00 100
5,000 44. Normative economic statement is concerned with what should
Jan 2007 2.00 120 be and is often identified with policy prescriptions. Which of the
4,000 following is an example of normative economic statement?

41. The table shows that A. The government should increase the tax for SMS (short
message service)
a. As income decreases from December to January, more to increase government revenues.
pandesal were purchased B. Taxing SMS will increase government revenues.
b. As income increases from December to January, more C. The importation of rice should be allowed during periods
pandesal were purchased of shortage to avoid the price
of rice to increase abruptly.

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D. If the government will not import rice during periods of c. the TU curve is U-shaped because as consumption
shortage, price of rice will increase increases, total utility declines initially and then
E. all of the above increases
d. the TU and MU curves used ordinal utility to measure
45. An increase in supply will leave the price unchanged unless satisfaction level

a. Supply is perfectly elastic C. Demand is 49. Using the indifference curve analysis, consumer equilibrium is
highly inelastic achieved if:
b. Demand is perfectly elastic
a. MRSxy= Px/Py
46. A vertical supply curve can be associated with b. An indifference curve is tangent to a given budget line
c. MUx/Px = MUy/Py
a. Perfectly elastic supply D. Long run d. All of the above
supply curve e. None of the above
b. Perfectly inelastic supply e. none of the
above 50. The statement 1 balot = 3 pieces of siomai = 50 utils implies
c. Short run supply curve a. An ordinal measure of utility only
b. A cardinal measure of utility only
47. If the MU of the last unit of X consumed is twice the MU of the c. An ordinal and cardinal measures of utility
last unit of Y consumed, the consumer is in equilibrium only if d. None of the above

a. the price of X is equal to the price of Y 51. Which of the following statements is NOT true based on the
b. the price of X is twice the price of Y figure given below?
c. the price of X is one half of the price of Y
d. any of the above is possible K

48. Which of the following statements is NOT true?

a. the TU curve is at its peak or saturation point when MU C

curve crosses the x-axis B
b. the MU curve is negatively-sloped due to the law of
A
diminishing marginal utility
III

II
I
L
0
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 Agricultural Economics & Marketing

a. Isoquant III depicts the highest level of output possible

because more units of capital and labor are used a. P 150,000 per year C. Less than P
compared to isoquants I & II 150,000 per year
b. The producer’s equilibrium condition is at point B where b. More than P150,000 per year D. Any of the
the isocost is tangent to Isoquant II above is possible
c. Isoquant III cannot be attained because the available
capital outlay is insufficient 55. When the law of diminishing marginal returns begins to operate,
d. At point B, MRTSLK > PL/PK the TVC curve begins to
a. fall at an increasing rateC. fall at a decreasing rate
52. Ends when TP curve reaches its peak and MP curve crosses the b. rise at a decreasing rate D. rise at an increasing rate
X-axis
56. Which of the following industries most closely approximates the
a. Stage I of production C. Stage III of perfectly competitive model?
production or
b. Stage II of production D. any of the a. oil C. postal service
above b. movie D. rice farming

53. Which of the following statements is NOT true in the long-run? 57. The short –run supply curve of the perfectly competitive firm is
given by
a. the most efficient plant size is determined when a given
short-run a. the rising portion of its MC curve over and above the
b. average cost (SAC) curve is tangent to the lowest portion break-even point
of the long run average cost (LAC) curve. b. the rising portion of its MC curve over and above the
c. diseconomies of scale exists when LAC declines as the AVC curve
quantity of output increases due to division of labor and c. the rising portion of its MC curve over and above the AC
specialization curve
d. the economies and diseconomies of scale in the long run d. the rising portion of its MC curve
is analogous to the law of diminishing marginal returns
in the short run 58. Which form of monopoly regulation is most advantageous for
e. all costs are variable the consumer?

54. An Animal Science graduate running their family-owned piggery a. price control C. specific tax
takes out P150,000 per year as his “salary” from the total b. lump sum tax D. all of the
receipts of their farm. The implicit cost of this entrepreneur is above are equally advantageous

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 Agricultural Economics & Marketing

10 20 30 40 Q
59. If price exceeds AVC but is smaller than AC at the best level of
output, the firm is a. the figure depicts that MR is lower than price. Hence,
MR curve liesbelow the demand curve
a. making a profit b. the firm is not operating under a purely competitive
b. incurring a loss but should continue to produce in the market
short run c. the firm is incurring losses at the given output level and
c. incurring a loss and should stop producing price
d. breaking even d. the firm must produce 20 units of output

60. If the monopolist imposes a per unit tax, this will result in which 62. Which among the following statements is incorrect?
of the following situations?
a. wage rate is determined by the interplay of supply of
a. AC curve alone to shift up and demand for labor
b. AC and MC curves to shift up because the per unit tax is b. demand for resources is a derived demand, meaning it is
like a fixed cost a function of the demand for goods and services
c. AC and MC curves to shift up because the per unit tax is c. interest is the payment for the use of natural resources
like a variable cost like land
d. none of the above d. profit is the incentive that accrues to the
61. Based on the figure below, which of the following statements is management/entrepreneurial talents and skills of the
NOT TRUE? business owner

Use the following table to answer the next five (5) items:
P MC
CC Output Total Revenue Total Cost Profit
0 0 400 -400
AC 100 400 1000 -600
200 800 1300 -500
300 1200 1500 -300
400 1600 1600 0
500 2000 1700 300
600 2400 1850 550
MR D 700 2800 2100 700
750 3000 2265 735
800 3200 2500 700

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 Agricultural Economics & Marketing

900 3600 3600 0 a. profit maximization C. break even

b. loss minimization D. shut down
63. The Total Fixed Cost is case

a. zero C. 100 69. Which among the following is an example of an implicit cost?
b. 400 D. 3600
a. salaries paid to hired farm workers
64. In order to attain maximum profit, the firm should produce how b. costs of seeds and fertilizers
many units? c. depreciation cost of self-owned jeep used as delivery
vehicle in the farm
a. 700 C. 800 d. land rent
b. 750 D. 900
70. MC can be derived through
65. The firm breaks even at
a. the slope of the TFC curve alone
a. 400 D. 700 b. the slope of the TVC curve alone
b. 900 e. 400 & 900 c. the slope of the TC curve alone
units of output d. either the slope of the TVC curve or the slope of the TC
c. Zero curve
e. either the slope of the TFC curve or the slope of the TC
66. The marginal revenue is equal to price at curve

a. 1 C. 3 71. Which among the following statements is incorrect?

b. 2 D. 4
a. all cost curves are U-shaped except the AFC curve
67. Marginal cost at the output level 400 is equal to: b. the MC curve reaches its minimum point before the AVC
a. 1 C. 3 curve and the AC curve
b. 2 D. 4 c. when the law of diminishing returns begins to operate,
the TVC curve begins to rise at a decreasing rate
d. the MC curve intersects the AVC curve and the AC curve
68. Identify the condition depicted by the following data assuming a at their lowest points
perfectly competitive market model: Price = Php 25/unit; TR =
Php 2500; TVC = Php 2500 and TFC = Php 500

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72. Assuming that we have increasing returns to scale. If we

increase the quantity of capital used per unit of time by 20% but 76. Profit is maximum if :
keep the amount of labor constant, output will
a. the difference between TR and TC is maximum
a. increase by 20% C. increase by b. marginal cost is equal to price
more than 20% c. the slope of the TR curve is equal to the slope of the TC
b. decrease by 20% D. increase by curve
less than 20% d. all of the above

73. Which among the following statements is incorrect? 77. If the market price of a kilo of rice is Php 24 while AVC and AC
are Php 20/kg and Php 25/kg, respectively, the firm is
a. the LAC curve is tangent to the lowest point on the SAC
curves when the LAC curve is falling a. making a profit
b. If the LAC curve falls as output expands, this fall is due to b. incurring a loss but should continue to produce in the
economies of scale short run
c. LAC curve is an envelope curve of all possible SAC curves c. incurring a loss and should stop producing immediately
d. The most efficient plant size is derived if the lowest d. breaking even
portion of an SAC is tangent to the lowest portion of the
LAC 78. The AFC in the above given situation is.

74. Which among the following is NOT a source of monopoly power? a. 3.0 C. 5.0
b. 4.0
a. ownership of a patent 79. Use the figure below to answer the next three (3) items:
b. control over supply of a raw material
MC
c. free entry to the industry AC
d. product being produced has no close substitute P
AVC
75. A purely competitive firm is characterized by all except one of
MR2 = D2 = P2
the following:
MR1 = D1 =P1
a. products are identical or homogenous
b. entry to the industry is blocked
c. there is perfect knowledge of prices Q
d. firms operating in the industry are price takers

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80. The above figure depicts the situation for a b. Interest payments on loans used to purchase farm
machineries
a. Monopolist C. Purely c. Cost of feeds and biologics
competitive firm d. Gasoline used to run the water pump for irrigation
b. Oligopolist D. Any of the
above 85. Specialization and division of labor will likely to result in:

81. If the existing price is P2 the firm is a. Economies of scale C. Law of

diminishing marginal returns
a. Making a profit b. Diseconomies of scale D. Any of the
b. Incurring a loss but should continue to produce in the above
short run
c. Incurring a loss and should stop producing immediately 86. The boundary between State I and Stage II of production given
d. Breaking even one variable input is when

82. If the market price becomes P1 the firm is a. Marginal Product is equal to zero
a. Making a profit b. Average Product is declining and Marginal Product is
b. Incurring a loss but should continue to produce in the greater than Average Product
short run c. Marginal Product = Average Product
c. Incurring a loss and should stop producing immediately d. Total Product is maximum
d. Breaking even
87. A technological improvement occurs in the production of
83. Which of the following statements is incorrect given the total gasoline. What effect would this have on the equilibrium price
cost function: and equilibrium quantity of gasoline?
TC = 250 + 20Q + 10Q2
a. Equilibrium price and quantity would both increase
a. AFC is 25 at Q = 10 C. AVC is 130 at b. Equilibrium price would increase, but equilibrium
Q = 10 quantity would decrease
b. TC is 400 at Q = 3 D. ATC is 145 at c. Equilibrium price would decrease, but equilibrium
Q = 10 quantity would increase
d. Equilibrium quantity would increase, but the effect on
84. An example of a fixed cost is: price is indeterminate

a. Salaries of farm laborers

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88. The equilibrium quantity for good X is 20 units per day and the b. a surplus of unemployed labor would result
equilibrium price is P100 per unit. If a surplus currently exists for c. the entire supply curve for labor would shift to the right
good X, then d. the entire supply curve for labor would shift to the left

a. the price currently is less than P100 per unit, quantity 91. Good X currently is at its equilibrium price of P20 per unit and its
supplied is greater than 20 units per day, and  quantity equilibrium quantity of 35 units per day. The entire supply curve
demanded is less than 20 units per day then shifts up and to the left because of a change in supply. If a
b. the price currently is less than P100 per unit, quantity price ceiling of P20 per unit is imposed by the government, then
supplied is less than 20 units per day, and quantity
demanded is less than 20 units per day a. quantity demanded will remain at 35 units per day and a
c. the price currently is less than P100 per unit, quantity surplus will result
supplied is less than 20 units per day, and quantity b. quantity demanded will remain at 35 units per day and a
demanded is greater than 20 units per day shortage will result
d. the price currently is greater than P100 per unit, quantity c. quantity demanded will decrease below 35 units per day
supplied is greater than 20 units per day, and  quantity and a surplus will result
demanded is less than 20 units per day d. quantity demanded will decrease below 35 units per day
and a shortage will result
89. Over time it is observed that the equilibrium price of good X has
increased, although the equilibrium quantity has remained 92. A government imposed price ceiling (maximum legal price) on
constant. It can be concluded that rents in apartment in Metro Manila will create a

a. the entire supply curve has shifted to the right while the a. shortage if the price is set below the equilibrium price
entire demand curve has shifted to the left b. surplus if the price is set below the equilibrium price
b. there have been shifts in both the entire supply and c. shortage if the price is set above the equilibrium price
demand curves to the right d. surplus if the price is set above the equilibrium price
c. there have been shifts in both the entire supply and
demand curves to the left 93. Good X is a necessity and there are no close substitutes available
d. the entire supply curve has shifted to the left while the for it. If the price of good X were increased by 25%, then the
entire demand curve has shifted to the right producers of good X can expect that
90. Assume that the equilibrium wage for unskilled workers is
exactly P150 per day, the level of the minimum wage. If a a. quantity demanded would decrease by more than 25%
recession occurred and the demand for labor decreased, the because demand is elastic
b. quantity demanded would decrease by more than 25%
a. a shortage of labor would occur because demand is inelastic

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c. quantity demanded would decrease by less than 25%

because demand is elastic 96. Which of the following characteristics will tend to make the
d. quantity demanded would decrease by less than 25% demand for good X most inelastic?
because demand is inelastic
a. Good X represents a small share of most consumers’
94. If a firm increases the price of its product by 8% and discovers budgets and there are many close substitutes available
that its total revenue (TR) increases as a result, then it can for it
conclude that b. Good X represents a small share of most consumers’
budgets and there are no close substitutes available for
a. quantity demanded decreased by less than 8% and thus it
demand is elastic c. Good X represents a large share of most consumers’
b. quantity demanded decreased by more than 8% and budgets and there are many close substitutes available
thus demand is elastic for it
c. quantity demanded increased by less than 8% and thus d. Good X represents a large share of most consumers’
demand is inelastic budgets and there are no close substitutes available for
d. quantity demanded decreased by less than 8% and thus it
demand is inelastic
Use the following diagram for the next four(4) items
95. Recent studies have confirmed that the demand for electricity is
inelastiC. As the price of electricity increases, RESOURCE
Costs MARKET Rents, interests,
a. total peso spent by consumers on electricity will increase Salaries, profit

because the percentage increase in quantity demanded Economic resources Land, capital, labor

will be greater than the percentage increase in price Entrepreneurial ability

b. total peso spent by consumers on electricity will increase

because the percentage increase in quantity demanded BUSINESS HOUSEHOLD
will be less than the percentage increase in price FIRMS
c. total peso spent by consumers on electricity will Costs Goods and services

decrease because the percentage decrease in quantity

demanded will be greater than the percentage increase
Receipts PRODUCT Consumption
expenditures
MARKET
in price
d. total peso spent by consumers on electricity will increase
because the percentage decrease in quantity demanded 97. The resource market is where
will be less than the percentage increase in price

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a. household sell products and businesses buy products b. Total Cost (TC) D. Total Fixed
b. businesses sell the resources and household buy Cost (TFC)
products
c. household sell resources and businesses buy resources 102. A firm is selling its product at P10 per unit. It doubles the price
d. businesses sell resources and household buy resources of its product to P20 per unit and discovers that its quantity
demanded is cut exactly in half as a result. The firm can
98. Which of the following will be determined in the product conclude that between P10 and P20,
market?
a. total revenue (TR) will increase because demand is
a. manager’s salary inelastic.
b. the price of equipment used in a manufacturing firm b. total revenue (TR) will decrease because demand is
c. the price of a 30-hectare farmland elastic.
d. the price of a new pair of leather shoes c. total revenue (TR) will remain constant because demand
99. In this circular flow diagram is inelastic.
d. total revenue (TR) will remain constant because demand
a. money flows counterclockwise is of unitary elasticity
b. resources flow counterclockwise (elasticity value = 1).
c. goods and services flow clockwise
d. households are on the supply side of the product market 103. The statement that sardines is an inferior good, as economists
use the term,
100. In the same diagram,
a. means that as the price of sardines falls, the quantity
a. household spend income in the product market demanded of sardines falls
b. firms supply resources to the household b. means that there is no real income effect when the price
c. household receive income through the product market of sardines changes
d. household produce goods c. is an example of a normative statement
d. means that as the average level of income falls, the
101. A firm which is producing 100 units of quantity discovers that demand for sardines rises
at this quantity all of the following variables have positive P e. means that the supply of sardines is perfectly inelastic
values. Which one has the highest P value at this quantity?
104. The difference between a scarce (economic) good and a free
a. Total Revenue (TR) C. Total Profit good is that
(TP)

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a. for free goods at a price of zero enough of the good is 108. In agricultural marketing, the utility created if goods possess
available to completely satisfy consumers' demand for the required properties that consumers want them to be
the good
b. free goods no longer exist -- there are only scarce goods a. Form utility C. Place utility
c. free goods are made with natural resources b. Time utility D. Possession
d. free goods are provided by the government utility

105. Suppose that as the price of gasoline rises from P33.00 per liter 109. The strawberries of Benguet can be bought in the
to P50 per liter, the quantity of gasoline sold increases from 10 supermarkets of Manila. What utility was created in this
million liters to 15 million liters. Which of the following is a situation?
possible explanation for this?
A. form utility C. place utility
a. There were fewer users of automobiles B. time utility D. possession
b. The price of public transportation increased over the utility
same time period
c. The demand curve for gasoline is perfectly inelastic 110. This refers to an activity or function performed to alter the
d. All of the above are possible explanations form, time, place or possession characteristics of the product

106. If the demand for product J shifts to the left as the price of A. marketing service C. market
product K increases, then planning
B. food processing D. marketing
a. J and K are complementary goods function
b. J and K are not related goods
c. the number of consumers of product K has increased 111. A marketing service that influences the consumers to buy. The
d. J and K are substitute goods objective is to inform consumers what is available for
purchase, especially if the product is new in the market.
107. A series of services involved in moving a product from the
point of first sale (usually at the farm level) to the point of last A. market intelligence C. market
sale (to the consumer) refers to research
B. advertising D. branding
a. Marketing operation C. Marketing
b. Marketing function D. Buying and 112. An approach in the study of marketing which covers the
selling characteristics of the product, the market demand and supply
situation at the domestic and international level, the behavior

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 Agricultural Economics & Marketing

of the consumers in relation to a specific product, and prices a. Monopolistic market C. Oligopolistic
either at the farm, wholesale or retail level market
b. Purely competitive market D. Perfect
A. institutional approach market
B. commodity approach
C. functional approach 116. This marketing function addresses the problem of product
D. market-structure-conduct-performance approach seasonality. The primary aim of which is to help balance the
period of plenty to the period of scarcity
113. This agent usually does not have physical control of the
product. He ordinarily follows the instructions of his principal a. Pooling C. Processing
closely and has less discretionary power in price negotiations b. Storage D. Packaging
than the commission agent
117. It refers to an inter-organizational system made up of a set of
a. Agent middlemen C. Commission interdependent institutions and agencies involved in the task
agent of moving products from their point of production to the point
b. Merchant middlemen D. Broker of consumption.

114. This marketing function involves the establishment and a. Marketing system C. Marketing
maintenance of uniform measurement. This function also channel
simplifies buying and selling, since it makes possible the sale by b. Marketing margin D. Marketing
sample and description program

a. Financing function C. 118. These are product handlers who serve as the last link in the
Standardization function marketing channel. They have greater utility both in rural and
b. Risk-bearing function D. Market urban centers by selling directly to consumers. They occupy
intelligence function permanent stalls in the market or on roadsides. Selling is on a
retail basis and is conducted almost everyday
115. A type of market where the number of buyers and sellers is
sufficiently large so that no individual can perceptibly influence a. Merchant middlemen C. Retailers
price by his decision to buy or sell. The product is also b. Wholesalers D. Brokers
sufficiently homogenous so that the product of one firm is
essentially a perfect substitute for that of other firms. 119. This refers to the difference between prices at different levels
of the system. It can also be defined as the difference between
what the consumer pays and what the producer receives for

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 Agricultural Economics & Marketing

his agricultural produce. It is also termed as “price spread” 123. Producers shoulder any increase in transportation cost in the
between farm price and retail price. short run because of

a. Marketing costs C. Marketing a. inelastic supply in the short run

margin b. elastic supply of agricultural products in the short run
b. Marketing charges D. Mark-up c. consumers’ resistance
d. none of the above
120. This refers to the cost of marketing services rendered between
the farmers and consumers. These include labor wages, 124. In the Cobweb Model, prices and quantities are viewed as
interest on borrowed capital, land rent, building rental, and linked recursively in a causal chain. A high price leads to large
the profit of the entrepreneur who risks his capital production, the large supply results in low prices, which in turn
result in smaller production, and so forth. This model explains
a. Marketing costs C. Marketing the:
margin
b. Marketing charges D. Mark-up A. seasonal price variation C. cyclical price
variation
121. It is one type of middleman in agricultural marketing whose B. annual price variation D. irregular
function, in modern times, have increased from changing movements in prices
product forms to buying raw materials to wholesaling the
finished product to retailers 125. Demand for finished product, e.g., choice cuts of meat is
considered
a. Processors and manufacturers C. Wholesalers
b. Facilitative organization D. Assembler- a. Primary demand C. Consumer
wholesaler demand
b. Drived demand D. Both a and c
122. This approach covers consumer preferences, demand and
supply analysis, product characteristics and price behavior 126. A brand name is a symbol to make the product

a. commodity approach D. Industrial organizations a. easy to recognize C. Competitive

approach b. to convey a meaning D. A and B
b. institutional approach e. market efficiency or analytical
approach 127. It is a marketing activity which involves the sorting of products
c. functional approach into lots or units according to one or more of their quality
attributes

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 Agricultural Economics & Marketing

a. product differentiation C. barrier to

a. Standardization C. Grading entry
b. Packaging D. Branding b. seller concentration D. market
conduct
128. It is a part or component of the marketing system, which
includes the climatic/physical, socio-cultural, economic, 132. The components of the marketing margin are
technological, and legal/political factors, that affects the
marketing system a. marketing costs and marketing charges
b. marketing costs and transportation costs
a. consumer subsystem C. environment c. transportation costs and processing costs
subsystem d. marketing costs and storage costs
B. functional subsystem D. channel
subsystem 133. A series of figures representing the absolute margins of
different types of middlemen assignable to different marketing
129. A marketing function which does not only encourage functions divided by the retail price.
consumers to buy, but also to encourage them to buy more
than what they neeD. a. percentage margin C. percentage
mark-up
A. advertising C. Packaging b. constant margin D. breakdown of
B. promotion D. Selling the consumer peso

130. They are those individuals or business concerns that specialize 134. This is a pricing strategy to gain more customers while
in performing the various marketing functions involved in the maintaining/holding the present ones. (e.g., odd-centavo
purchase and sale of goods as they are moved from producers pricing, even-centavo pricing, quality image pricing, price of
to consumers P0.99 etC.)
a. unit pricing C. special pricing
A. Middlemen C. Processors b. price lining D. psychological
B. Farmers D. Consumers pricing

131. Economies of scale, capital requirement, government rules and 135. A major specialized activity performed in accomplishing the
regulations and inherent technical relationships in the industry different marketing processes
are dimensions of
a. marketing system C. marketing
function

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 Agricultural Economics & Marketing

b. marketing machinery D. marketing a. Retailer C. contract

institutions buyer
b. wholesaler-retailer D. both a and b

139. The proportion handled by the assembler-wholesaler is

Please refer to the given figure for items 136-142 a. 25% C. 55%
b. 30% D. 45%
18% 1%
CB
R losses
1% losses 140. The contract buyer handles ___of the volume sold by the
farmer
63% 7% R

30% a. 100% C. 63%

b. 37% D. 17%
22%
F
Farmers C
100% 141. The proportion which reached the final consumer is equivalent
100% WR
RR to
100
15% AW
%10 AW/W
WW a. 100% C. No basis
0% because of the losses
b. 99%

136. The given marketing channel has ___ product flows 142. The volume handled by the farmers represents their

a. 11 C. 5 a. total production C. production +

b. 9 D. 8 consumption
b. production + imports D. marketable
137. The simplest product flow is surplus

a. F-CB-R-C C. F-AW-WR-C 143. It is a type of middleman who takes title to and therefore,
b. F-WR-R-C D. F-WR-C owns the products he handles. He also buys and sells for his
gain.
138. The ultimate link to the consumers in this system is the

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 Agricultural Economics & Marketing

a. Middleman C. Commission a. P 0.50 per kg C. P 2.00 per kg

agent b. P 7.50 per kg D. None/ P 0.00
B. Merchant middleman D. Broker
148. The wholesaler’s percentage mark-up is
144. A type of middlemen who act only as representative of their
client. They do not take title to and therefore do not own the a. 0% C. 13%
products they handle. They just receive their incomes in the b. 20% D. 25%
form of fees and commissions. They sell their services to their
principal, not physical goods to consumers 149. The retailers’ percentage margin is:

A. agent middlemen C. commission a. 50% C. 33%

agent b. 67%
b. merchant middlemen D. Broker
150. The retailer’s percentage mark up is:
Use the following situation in answering the next six (6) items.
a. 50% C. 33%
An onion farmer from Nueva Ecija sold his produce to an b. 67%
assembler- wholesaler at P7.50/kg and later sold this to a
wholesaler at P8.00 per kg. The wholesaler in turn disposed 151. Fred is able to help negotiate the purchase process, while
this to a retailer at P10.00/kg who later sold it to consumers at uniting buyers and sellers. They greatly value his expertise, and
P15.00/kg. he doesn’t have to buy the products in order to resell them.
Fred is a ________.
145. The price spread for the onion is
a. commission merchant D. truck
a. P2.50 per kg C. P5.00 per kg wholesaler
b. P1.50 per kg D. P7.50 per kg b. drop shipper e.
Manufacturer’s Agent
146. The farmer’s share is c. broker

a. 50% C. 25% 152. Real GDP (or GDP in "constant dollars") means
b. 75% D. 67%
a. GDP has been adjusted for price level changes
147. The absolute marketing margin of the farmer is: b. GDP is not changing
c. GDP has been corrected for quality changes

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 Agricultural Economics & Marketing

d. prices have not changed d. None of the above

e. GDP has been corrected for changes in tastes
157. Which among the following transactions should be included in
153. Which of the following items is excluded from the calculation the computation of GNP?
of GDP?
a. sale of a second-hand automobile
a. the purchase of 100 shares of General Motors stock b. sale of marketable securities like bonds and stocks
b. the sale of 100 shares of General Motors stock c. sale of agricultural products like vegetables and cereals
c. the value of a housewife's services d. none of the above
d. the sale of unused military surplus
e. all of these 158. It is the slope of the consumption function which is the change
in the level of consumption (C) resulting from a change in
154. GNP represents: disposable income (Yd)

a. The market value of all intermediate goods and services a. average propensity to consume C. marginal
produced by the economy within the year propensity to save
b. The market value of all final goods and services b. marginal propensity to consume D. average
produced by the economy within the year propensity to save
c. The market value of all final and intermediate goods and
services produced by the economy within the year 159. If, from year 1 to year 2, real GDP decreases despite the fact
d. Any of the above that money GDP increased, then it can be concluded that the
price level index
155. The phase of the business cycle wherein output is at its highest
and employment expands to full employment. a. increased, but by a smaller percentage than money GDP
increased
a. Peak C. Trough b. increased by a greater percentage than money GDP
b. Recession D. Recovery increaseD.
c. decreased by a greater percentage than money GDP
156. Which among the following groups of people is most increaseD.
negatively affected by inflation? d. decreased, but by a smaller percentage than money GDP
increaseD.
a. businessmen
b. government employees receiving fixed incomes 160. Which one of the following would cause the greatest amount
C. salesmen receiving commissions of unemployment?

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 Agricultural Economics & Marketing

b. transaction demand for money D. real demand

a. both the aggregate demand and supply curves shift to for money
the right.
b. both the aggregate demand and supply curves shift to 164. Nominal money supply is
the left.
c. the aggregate demand curve shifts to the right and the a. the peso value of the nation’s money supply
aggregate supply curve shifts to the left. b. flow of receipts per unit of time
d. the aggregate demand curve shifts to the left and the c. checking accounts at commercial banks
aggregate supply curve shifts to the right. d. peso value of the money supply over the price level
165. It measures the change in the equivalent level of income due
161. The reserve held by the bank over and above the legal reserve to a change in the aggregate expenditures

a. required reserve C. interest rates a. marginal propensity to consume C. balance

b. excess reserve D. none of the budget multiplier
above b. multiplier D. marginal
propensity to save
162. Keynes recognized that there are three distinct motives for
holding money. How would you classify money balances held 166. This is a group of policies where public budget, government
to meet unforeseen contingencies because of uncertainty spending and tax collections are manipulated to achieve full
about the receipt and expenditure of future income. employment

a. speculative demand for money C. precautionary a. fiscal policy C. business

demand for money policy
b. b. transaction demand for money D. real demand b. monetary policy D. agricultural
for money policy

163. A household purchased dollars this time that the Philippine 167. The problem of unemployment exists when people who are
peso is strong given an exchange rate of Php41:$1, with the willing and able to work could not find jobs. What type of
anticipation to sell said dollars when its value appreciates. unemployment is caused by a deficiency of aggregate or total
What demand for money is exhibited by this situation? demand?

a. speculative demand for money C. precautionary a. Frictional unemployment C. Cyclical

demand for money unemployment

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 Agricultural Economics & Marketing

b. Structural unemployment D. b. the change in consumption is greater than the change in

Underemployment income
c. people stop consuming when they become affluent
168. Crude oil is one of the primary inputs to production for it runs d. none of the above
factory machines and equipment. An increase in its price in
the world market will result to what type of inflation? 172. An autonomous increase in investment will result in

a. Demand pull or Excess demand inflationC. a. Higher level if income and higher rate if interest
b. Cost push inflation b. Lower level of income and lower rate of interest
c. Demand shift inflation c. Higher level of income and lower rate of interest
d. None of the above d. Lower level of income and higher rate of interest

169. The equation C = 50 + 0.80 Yd predicts that the consumption is 173. If the national government lowers taxes and government
spending by 10, and the MPC is 0.90, the income will fall by
a. 130 when Disposable income is 100 C. 100 when
Disposable income is 90 a. 90 C. 10
b. 120 when Disposable income is 100 D. 180 when b. 80 D. 30
Disposable income is 200
174. Equilibrium occurs in a two-sector model when
170. An increase in the level of taxes levied on households
negatively affects aggregate demand through a reduction in a. Savings equals investment
the disposable income. Hence, the value of the tax multiplier b. Consumption plus investment equals planned
is investment
c. Aggregate spending equals the revenue of business firms
a. Greater than the government expenditure multiplier d. None of the above
b. Equal to the government expenditure multiplier
c. Less than the government expenditure multiplier 175. If the marginal propensity to consume is 0.80, the multiplier
d. Equal to the investment multiplier has a value of

171. Keynes’ fundamental law states that a. 2 C. 4

b. 3 D. 5
a. the change in income is greater than the change in
consumption 176. The Cambridge version of the equation of exchange is

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 Agricultural Economics & Marketing

a. MV = Y C. MY = k b. causes B’s exports to increase D. causes B’s

b. Mk = Y D. M = kY income level to fall

177. The Central Bank can increase demand deposits by 181. Which of the following statements is incorrect?

a. Lowering reserve requirement or decreasing the volume a. There is a precautionary demand for money to meet
of reserves contingencies or unforeseen expenditures
b. Increasing reserve requirement or decreasing the b. The quantity of money held for precautionary needs falls
volume of reserves as households are paid more frequently
c. Lowering reserve requirement or increasing the volume c. There is a precautionary demand for money because of
of reserves uncertainty about the receipt of future income
d. Increasing reserve requirement or increasing the volume d. The precautionary demand for money is unrelated to the
of reserves level of income

178. If the demand for money equals 0.25Y, the money multiplier 182. Which of the following relationship between Marginal
(Mm) has a value of Propensity to Consume (MPC) and Marginal Propensity to Save
(MPS) is true?
a. 0.25 C. 4.0
b. 2.50 D. 5.20 a. MPC – MPS = 0 C. MPC + MPS
=1
179. If money wages increase and there is no change in the price b. MPC – MPS = 1 D. None of the
level, the real wage above

a. increase and the employment of labor decreases 183. 182. Given the equation C = Php 50 + 0.80Yd, which of the
b. increase and the employment of labor increases following statements is incorrect?
c. decreases and the employment of labor decreases
d. decreases and the employment of labor increases a. Consumption is Php130 when disposable income is
Php100
180. In a two-country model of trade where imports in both b. The value of consumption will increase by Php0.80 for
countries are a function of their domestic levels of income, an every peso increase in disposable income
increase in A’s imports c. The value of savings is Php40 when disposable income is
Php200
a. causes B’s exports to decrease C. has no effect d. The value of the multiplier is 2.0
on B’s exports

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 Agricultural Economics & Marketing

184. If the marginal propensity to save is 0.25, the multiplier has a 188. The saving function (S) is given by:
value of
a. S = -50 + 0.20 Y C. S = 0 + 0.20 Y
a. 5.0 C. 3.0 b. S = -50 + 0.80 Y D. Y = -50 + 0.20
b. 4.0 D. 2.0 C

185. 184. If the increase in government spending is matched by a 189. The value of S at Y = 300 is
decrease in transfer payments, the income level will
a. Php 5 million C. Php 15 million
a. stay the same C. Fall b. Php 10 million D. Php 20
b. Rise million

186. If C = Php 75 + 0.90Yd, 190. The value of the multiplier is

a. the MPC is 75 C. the MPS is a. 2 C. 4

0.10 b. 3 D. 5
b. the MPC is 0.10 D. the MPS is
0.90 191. Which among the following statements is incorrect?

For the next five (5) items, use the table given below. Assume a. There is a dissavings of Php 50 million when Y = 0
that income (Y) and consumption (C) expenditures are in b. There is a savings amounting to Php 50 million when Y =
millions of pesos. 400
c. MPS = 1 – 0.80
Y 0 100 200 300 400 500 d. An increase in investment by Php 10 million will increase
C 50 130 210 290 370 equilibrium income by Php 50 million
450
Use the data given below to answer the next two (2) items:
187. The consumption function is given by:
A thresher was purchased in January 1, 2006 valued at P
a. C = 0 + 0.80 Y C. C = 130 + 0.80 75,000.00. It is estimated to last for five years after which it
Y will have a value of Php 5,000.
b. C = 50 + 0.80 Y D. Y = 50 + 0.80
C 192. The depreciation cost for one year is:

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a. Php 7,500 C. Php 14,000

b. Php 15,000 D. Php 10,000 197. A tax of P1.46 per pack of cigarette is an example of

193. The book value of the thresher at the end of year 2007 is a. ad valorem tax C. Income tax
b. Excise tax D. None of the
a. Php 47,000 C. Php 74,000 above
b. Php 65,000 D. Php 50,000
198. Mr. Nestor loses his job in 2002 because his family relocated to
194. Which among the following statements is correct? Zambales. Mr. Nestor is considered

a. As accumulated depreciation increases through time, the a. structurally unemployed in 2002 C. cyclically
book value of the thresher also increases unemployed in 2002
b. The book value of a fixed asset after its useful life is its b. frictionally unemployed in 2002 D. a discouraged
salvage value worker in 2002
c. Land can also be depreciated because it is a fixed asset
like the thresher
d. All statements above are correct 199. 198. Which one of the following would cause the greatest
amount of inflation?
195. Given a proportional tax structure and a government budget
that is currently in balance, an autonomous increase in a. both the aggregate demand and supply curves shift to
investment will increase the level of equilibrium income and the right.
the budget b. both the aggregate demand and supply curves shift to
the left.
a. Will still be in balance C. Will have a c. the aggregate demand curve shifts to the right and the
deficit aggregate supply curve shifts to the left.
b. Will have a surplus D. None of the d. the aggregate demand curve shifts to the left and the
above aggregate supply curve shifts to the right.
196. An economy is in equilibrium when
200. An increase in aggregate demand will cause
a. Planned consumption exceeds planned saving
b. Planned consumption exceeds planned investment a. an increase in both the economy's price level and gross
c. Planned spending equals the value of output domestic product (GDP)
d. Planned spending equals the revenue of the business b. a decrease in both the economy's price level and gross
sector domestic product (GDP)

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c. an increase in the economy's price level, but a decrease b. neoclassical model D. structural
in gross domestic product (GDP) change model
d. a decrease in the economy's price level, but an increase
in gross domestic product (GDP) 203. States simply that the rate of growth of GNP is determined by
the national savings ratio and the capital-output ratio
 
a. Lewis model C. Rostow’s
model
b. Harrod-Domar growth model D. Dualistic
model

204. It is a concept which represents the existence and persistence

increasing divergence between rich and poor nations and rich
and poor people on various levels

a. Dualism C. Neoclassical

b. Equity D. Say’s law

201. The graphical changes from point E to point N noted above 205. The capacity of an economy to generate and sustain an annual
would be caused by which one of the following actions? increase in its GNP at rates of perhaps 5 to 7% or more is
a. Social security taxes are raised known as
b. The federal government increases spending by
rebuilding the nation's highways a. Lewis mode C. Harrod-
c. The cost of energy increases as world oil prices rise Domar growth model
d. Technological improvements increase worker b. Development D. Dualism
productivity
206. All except one of the following are in the area of
202. This theory viewed the process of development as a series of macroeconomics. Which is the exception
successive stages through which all countries must pass
a. Why unemployment rises during recession
a. linear stages theory C. international b. Effects of inflation on people and economic activity
dependent theory c. The cycles of recession and expansion since World War II

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d. Expansion of the application of computers to health care e. the change in business inventories was positive
diagnoses 210. Use the table at the right. The marginal propensity to
e. None of the above consume is

207. Mary lost her job as a drill press operator when computer a. .3 Income Saving
assisted drilling equipment was installed by her former b. .4 $0 $-20
employer. Mary is now seeking medical training. Mary's c. .5 100 10
unemployment is frictional. d. .6 200 40
e. .7 300 70
a. secular C. natural
b. tructural D. cyclical 211. The most expansionary monetary policy consists of

208. The inflation rate can be found by a. buying securities, lowering the reserve requirement, and
lowering the discount rate.
a. subtracting real income from nominal income. b. selling securities, lowering the reserve requirement, and
b. subtracting last year's price index from this year's price lowering the discount rate.
index. c. buying securities, lowering the reserve requirement, and
c. calculating the percent change in real income. raising the discount rate.
d. subtracting last year's price index from this year's price d. lowering the discount rate and lowering the reserve
index and dividing this difference by last year's price requirement.
index. e. increasing the Federal Funds rate, lowering the discount
e. subtracting real income from nominal income and rate, and selling government securities.
dividing this difference by nominal income.
212. The Federal Funds rate is the rate of interest
209. If a country's stock of privately owned capital is greater at the
end of the year than it was at the beginning of the year, it a. a bank charges its biggest and best commercial customer
must be the case that b. the Federal Reserve charges a bank when the bank
borrows reserves
a. depreciation was less than net private domestic c. paid on U.S. Treasury Bills
investment d. one bank pays another when borrowing its excess
b. net private domestic investment exceeded gross private reserves
domestic investment e. the federal government charges banks for loans
c. interest rates have fallen
d. net private domestic investment was positive

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213. When the required reserve ratio is 12.5% and the Federal
Reserve buys $10 billion of government securities, bank 214. Which of the graphs above depicts an increase in exports?
actual/legal reserves _____ by $_____ and the potential
money supply _____ by $_____. a. Graph A D. Graph D
b. Graph B e. None of these
a. rise, 10, rises, 40. D. fall, 10, falls, c. Graph C
12.5.
b. rise, 10, rises, 80. e. rise, 10, 215. Free trade based upon comparative advantage is economically
rises, 125. beneficial because
c. rise, 10, rises, 87.5.
a. it promotes an efficient allocation of the world's scarce
resources
b. it increases competition
c. it enables countries to consume beyond their respective
production possibility frontiers
d. of all the above reasons

216. Consider the two-country, two-good world given in the table.

According to the principle of comparative advantage,

Output per unit of Labor

  Beef Pork
USA 6 9
Mexico 3 4.5

a. the US will import beef from Mexico and export pork to

Mexico
b. the US will export beef to Mexico and import pork from
Mexico
c. the US will export both goods to Mexico
d. the US will import both goods from Mexico
e. no trade will take place between the US and Mexico

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217. The current law which addresses food security and

competitiveness of the agricultural sector is known as a. General Agreement on Trade and Taxes
b. General Agriculture on Tariffs and Trade
a. Agriculture and Fisheries Modernization Act c. General Agreement on Tariffs and Trade
b. Agriculture and Forestry Modernization Act
c. Agriculture Fisheries and Mining Act 222. The main recipients of distributed lands by virtue of CARP are
d. Agriculture Farm Management Act the
218. This is delivered by the president of the country during the
opening of the annual regular session of the legislative house a. Agricultural Resource Communities
b. Association of Reformed Communities
a. Speech of the National Address C. State of the c. Agrarian Reform Communities
Nation Address d. Agricultural Rehabilitation Centers
b. Special Organization for National Arts D. Speech for
National Advocacy 223. It is the agency which is mainly responsible to promote the
welfare of fishery sector
219. The country had entered into this group in 1994 as an
accession to global trade development a. Bureau of Freshwater and Aquaculture Resources
b. Bureau of Fisheries and Aquatic Resources
a. World Tariff Organization C. World Trade c. Bureau of Freshwater and Agricultural Resources
Organization
b. Welfare and Trade D. World and 224. The technical relationship between inputs and outputs is called
Trade Organization the:

220. It is a measure of determining which resource a country should a. balance sheet C. production
use abundantly in order to be competitive in the export function
markets b. income statement D.
“technostructure”
a. Record Company of America C. Revealed
Comparative Advantage 225. The distinction between variable and fixed inputs:
b. Rice and Corn Administration D. Resonance
Competitive Advantage a. can only be made in the long run
b. can be made by calculating the difference between an
221. A multilateral contract among member countries to gradually input’s marginal product and its average product.
remove trade protection thus allowing free trade is known as

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c. is based on the time period under consideration. 230. If for a firm, the price of input A is 4 times the price of input B,
costs will be minimized for a given level of output when the:
d. is that variable inputs are not subject to the law of
diminishing returns. a. firm uses 4 times as much input A as input B.
226. In the short run: b. total product of input A is 4 times greater than the total
a. all of the firm’s inputs are fixed. product of input B.
b. at least one of the firm’s inputs is fixed. c. average product of input A is 4 times greater than the
c. none of the firm’s inputs are fixed. average product of input B.
d. marginal product of input A is 4 times greater than the
227. The addition to total output which is due to the addition of the average product of input B.
last unit of an input is the:
231. Utility is a measure of:
a. cost of the input C. average
product of the input a. output. C. satisfaction
b. supply of the input D. marginal b. usefulness. D. indifference
product of the input
232. If the marginal utilities from consuming the first 5 units of a
228. One reason for the appearance of diminishing returns is that: commodity are 10, 16, 15, 12, and 9 respectively, then the
total utility received from consuming 4 units is:
a. each additional unit will have proportionately less of the
other units with which to work. a. 12 C. 41
b. the fixed inputs cannot produce any more as more units b. 27 D. 53
of a variable input are needeD.
c. whenever inputs are added to a production process, 233. The law of diminishing marginal utility implies that:
output will fall because of increased inefficiency.
d. the marginal product of the input. a. as people consume more and more goods their
happiness diminishes.
229. Which aspect of taxation involves positive economics? b. the marginal utility of the last peso spent on food equals
the marginal utility of the last peso spend on clothing.
a. the incidence of tax (i.e. who actually pays for the tax) c. the marginal utilities of both goods are the same.
b. the effect of the tax on incentives d. the marginal utilities of both goods are the greatest.
c. the fairness of the tax
d. all of the above

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234. If the marginal utility of food divided by the price of food

exceeds the marginal utility of clothing divided the price of a. explicit costs. C. empirical
clothing: costs.
b. total fixed costs. D. marginal
a. the price of food is too high and less food should be costs.
purchaseD.
b. the total utility received from food exceeds the total 238. The addition to total cost resulting from the addition of the last
utility received from clothing. unit of output is called the:
c. more should be spent on food and less clothing.
d. more clothing should be purchased to raise the marginal a. total variable cost. C. fixed cost
utility of the last dollar spent. b. average variable cost D. marginal cost.

235. Opportunity cost is: 239. A raising marginal cost curve will intersect the:

a. the variable cost a firm incurs by increasing output one a. average fixed cost curve at its minimum point.
unit. b. total cost curve at its minimum point.
b. the value of the best alternative use of a firm’s c. production function at its maximum point.
resources. d. average variable and average total cost curves at their
c. the output opportunities a firm gains when average fixed minimum points.
cost decline.
d. another name for explicit costs. 240. A possible reason for the existence of increasing returns to
scale is:
236. The basic difference between explicit and implicit cost is:
a. The inability of a firm to increase all inputs
a. explicit costs are measurable, implicit cost are not. proportionately.
b. explicit costs are private costs, implicit costs re social b. Problems of coordination and control.
costs. c. Higher input prices.
c. explicit costs are fixed costs, implicit costs are variable d. Greater specialization.
costs.
d. explicit costs reflects externally supplied resources, 241. A market consisting of many firms producing homogenous
implicit costs reflect owner-supplied resources. products having complete knowledge of relevant information,
no power over the product’s market price, and low barriers to
237. Short-run costs which do not change as output increases or entry is characteristic of:
decreases are called:

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a. perfect competition C. monopolistic c. cannot affect the price of its product because of
competition. government regulation.
b. monopoly D. oligopoly d. is able to sell all it can produce at the prevailing price

242. A market consisting many firms, low barriers to entry, some 245. A perfectly competitive firm faces a demand curve which is:
control over price, but considerable nonproce competition is
characteristic of: a. downward sloping
b. greater than the market price
a. perfect competition c. horizontal
b. monopoly d. equal to the total costs of production for each level of
c. monopolistic competition output
d. oligopoly
246. An isoquant is:
243. Which set of characteristics best identifies an oligopoly
market? A. The locus of points that gives the combination of inputs
that gives maximum profit
a. many firms, homogenous product, significant barriers to B. The locus of points that gives the combination of inputs
entry, significant nonprice competition, considerable where total product is maximum
power over price. C. The locus of points that gives the technically efficient
b. few firms, differentiated product, no barriers to entry, combination of inputs that yield the same level of outputs
the absence of nonprice competition, considerable D. All of the above
advertising.
c. one firm producing a product with no close substitutes, 247. Marginal revenue:
significant barriers to entry, considerable power over
price. a. generally rises as output increases.
d. few firms, differentiated product, significant barriers to b. exceeds price under conditions of monopoly.
entry, significant barriers to entry, significant amounts of c. is the addition to total revenue from the sale of one
nonprice competition. more unit.
d. Coincides with marginal cost at each level of output.
244. The perfectly competitive firm:
248. When marginal revenue exceeds marginal cost, a monopolist
a. strives to produce at the lowest total cost possible should:
b. is forced to respond to price actions of rival producers
a. expand output. C. raise price.

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b. discontinue production D. reduce demanD.

249. A firm’s shutdown point is the minimum value of:

a. Total Variable cost

b. Average cost
c. Average variable cost
d. Total cost

250. If a price of a fixed factor of production increases by 60 per

cent, what effect would this have on the marginal cost
schedule of a firm?

a. Marginal cost will increase by 60 per cent

b. Marginal cost will increase by less than 60 per cent
c. Marginal cost will increase by more than 60 percent
d. none

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