UNION CHRISTIAN COLLEGE

School of Business Science

Basic Microeconomics
Midterm Examinations

Name: Sobremonte, Joyce Anne B. Score:

Course & Year: BSBA 2 Date: November 03-07, 2023

I. True or False: Write True if the statement is true and False if the statement is false:
(Knowledge and Comprehension) (20 marks) Supply /Provide the correct answer. Each carries 1
mark.
_ True___ 1. A firm can increase output only by increasing its use of a variable factor
__False__ 2. In the long run, production function is explained with one variable factor and other factors
of productions are held constant
__True__ 3. While land is an essential component of most ventures, its importance can diminish or
increase based on industry.
__True___ 4. Labor can take on various forms
__False__ 5. Profits are the primary driver of value
__False__ 6. Marginal cost = Total variable cost (TVC) + Total fixed cost (TFC
__True___ 7. In a long-run planning perspective, a firm can consider changing the quantities of all its
factors of production
__True___ 8. At any level of total cost, the firm can vary its factor mix.
__True___ 9. ATC=TC/Q
__True __ 10. There are no brand differences in a perfectly competitive market.
__True___ 11. In a perfect competition market, each firm and each consumer is a price taker
__False___ 12. In pure monopoly, the equilibrium solution is efficient because price equals marginal cost
__True_ _ 13. Free exit occurs when a firm can exit the market without limit when economic losses are
being incurred.
__True___ 14. Just as entry eliminates economic profits in the long run, exit eliminates economic losses.
__False __ 15. Under perfect competition, the price elasticity to absolute value ratio is dictated by price
increase and market demand
__False___ 16. In pure monopoly, the demand curve is highly elastic because firms are free to enter and
exit the industry.
_ _False___ 17. In a perfect competition market, it is not possible to determine the demand curve of a
firm.
__True___ 18. The Oligopoly market structure lies between the pure monopoly and perfect competition,
where few sellers dominate the market and have control over the price of the product.
__True___ 19. Because entry is blocked, a monopoly firm can sustain an economic profit in the long run
__ True___ 20. In a monopolistic competition market, firms compete with one another without changing
the prices of their products.

II: Identification: (Knowledge and Comprehension) (10 marks) Supply /Provide the correct answer.
Each carries 1 mark.
1. _ Production Function _ refers to the relationship between factors of production and the output of a
firm.
2. _ Labor _ refers to the effort expended by an individual to bring a product or service to the market.

3. _ Average Total Cost___ is the firm’s total cost per unit of output
4. __ Marginal Cost____ is the amount by which total cost rises with an additional unit of output.
5. ___Marginal Revenue___ is the addition to the total revenue from selling one more unit.
6. ___Production Technologies ___ refers to all alternative methods of combining inputs to produce
outputs
7. ___Oligopoly____ is characterized by few sellers, selling homogeneous or differentiated products.

8. A __Monopoly firm __ is called the price setter

9.___Monopolistic Competition___ is a model characterized by many firms producing similar but
differentiated products in a market with easy entry and exit
10. __ Price Discrimination___ can be defined as the ‘practice by a seller of charging different prices
from different buyers for the same good or service’.
III: Word Hunt: (1) Find and shade the word/words in the word puzzle that best answer the
following questions; (2) write your answer on the blank provided.
(Knowledge and Comprehension) (40 marks) Supply /Provide the correct answer. Each carries 1
mark.
1. It means that one unit of the good or service cannot be differentiated from any other on any basis.
_ _Identical Goods___
2. ___Economic Profit____ includes the opportunity costs associated with production
3. The monopoly that sets the price and supply of a good or service is called the price ___maker___.

4. ___Sunk Cost____ is an expenditure that has already been made and that cannot be recovered

5. ___Oligopoly____ also called “competition among the few.

6. In an oligopoly market, it means that a firm takes into account the action and reaction of its
competing firms while determining its price and output level.
Interdependence
7. Monopoly power is the result of ____location_____.
8. A ___monopolist____ has the leverage to carry out price discrimination as he is the market and acts
as per his suitability.
9 – 10 Under a perfect competition market, price and output in a competitive market are determined by
___demand____ and ____supply____.
11. In a monopoly market, since there is only one supplier, and firms cannot easily enter or exit, there
are no ____substitutes____ for the goods or services
12. When the quantity of a factor of production cannot be changed during a particular period, it is called
a __ _fixed ___ factor of production
13. A factor of production whose quantity can be changed during a particular period is called a
___variable___ factor of production
14. __Inputs__ refers to the factors of production
15. ___Land___ is responsible for generating economic value
16. ___Entrepreneurship___ is the secret sauce that combines all the other factors of production into a
product or service for the consumer market.
17. ___Marginal Benefit___ for producers is often referred to as marginal revenue
18. Marginal revenue is the ___net___ revenue a business earns by selling an additional unit of its
product.
19. ___Capital___ facilitates the processes used in production by enabling entrepreneurs and company
owners to purchase capital goods or land or to pay wages.
20. ___Labor___ refers to all wage-earning activities

I N T E R D E P E N D E N C E G O O I

C O S T M A R K E T E S H A R E D S D

S E R S V I C E E C M B R A N D T R E

E S U S U P P L Y P A P L I E R E N N

T D T R D N B A D E N M F A T R K S T

U N E N W A K C O M D E R I P O T T I

T E A N I P R O D U C T F N X C I I C

I L A R L B U Y E R S E L P L E R F A

T P A L O C A T I O N A C U K I S O L

S V N T G B C O C E L E O T R B L R G

B E H A I V A K B I O R T S S I H P O

U O R T R P N L U N L O N G G R U C O

S N B U S U A I N E S S C O M P E I D

E N T R S N Y C R I N D P U S T R M S

R T I T I T S I L O P O N O M O U O M

E Y I G B R A N D N L P U T S T P N A

K U R C O N S U M Y E R T S B I P O Z

A A P E R F E C T C O M P E T I T C Q

M A P I H S R U E N E R P E R T N E Y
Prepared by: Checked by:

MARIA TERESA C. UMAYBAS EMMA A. GANUELAS, MBA, PhD

Faculty SBS - Focal Person

Approved by:

NELLIE M. GALVAN
Dean - SBS